sv1
As filed with the Securities and
Exchange Commission on July 2, 2010
Registration
No.
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SUPERCONDUCTOR TECHNOLOGIES
INC.
(Exact Name of Registrant as
Specified in Its Charter)
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Delaware
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3663
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77-0158076
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification No.)
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460 Ward Drive
Santa Barbara, CA
93111-2310
(805) 690-4500
(Address, including zip code,
and telephone number, including area code, of registrant’s
principal executive offices)
Jeffrey A. Quiram
President and Chief Executive
Officer
Superconductor Technologies
Inc.
460 Ward Drive
Santa Barbara, CA
93111-2310
(805) 690-4500
(Name, address, including zip
code, and telephone number, including area code, of agent for
service)
Copy to:
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Theodore E. Guth, Esq.
Matthew S. O’Loughlin, Esq.
Manatt, Phelps & Phillips, LLP
11355 West Olympic Blvd.
Los Angeles, California 90064
(310) 312-4000
(310)
312-4224 —
Facsimile
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David Ficksman, Esq.
TroyGould PC
1801 Century Park East, Suite 1600
Los Angeles, California, 90067
(310) 553-4441
(310) 201-4746 — Facsimile
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As soon as practicable after the
effective date of this Registration Statement.
(Approximate date of
commencement of proposed sale to the public)
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. o
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. o
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. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) 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. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated
filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act (Check one):
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Large accelerated
filer o
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller reporting
company þ
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(Do not check if a smaller
reporting company)
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CALCULATION OF REGISTRATION
FEE
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Proposed Maximum
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Proposed Maximum
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Title of Each Class of
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Amount to be
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Aggregate Offering
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Aggregate Offering
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Amount of
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Securities to be Registered
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Registered(1)
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Price Per Share(2)
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Price(2)
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Registration Fee
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Common Stock, $0.001 par value
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11,500,000 shares
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$2.39
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$27,485,000
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$1,960
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(1)
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Includes shares that the
underwriters have the option to purchase to cover
over-allotments, if any.
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(2)
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Estimated pursuant to
Rule 457(c) under the Securities Act of 1933, as amended,
solely for the purpose of calculating the registration fee based
on the average of the high and low prices of Superconductor
Technologies Inc.’s common stock, as reported on the NASDAQ
Capital Market on June 28, 2010.
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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, as amended, or until this
Registration Statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may
determine.
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 buy these
securities in any state where the offer or sale is not
permitted.
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SUBJECT TO COMPLETION, DATED
JULY 2, 2010
PRELIMINARY
PROSPECTUS
10,000,000 Shares
Common Stock
We are offering 10,000,000 shares of our common stock, par
value $0.001 per share. Our common stock is traded on the NASDAQ
Capital Market under the symbol “SCON.” On
June 28, 2010, the last reported sale price of our common
stock on the NASDAQ Capital Market was $2.35 per share.
Investing in our common stock involves risks. See “Risk
Factors” beginning on page 6 to read about factors you
should consider before buying our common stock.
Neither the Securities and Exchange Commission nor any state
securities regulator has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
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Per Share
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Total
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Public offering price
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$
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$
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Underwriting discounts and commissions
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$
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$
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Proceeds to Superconductor Technologies Inc. (before expenses)
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$
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$
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The underwriters also may purchase up to an additional
1,500,000 shares of our common stock within 45 days of
the date of this prospectus to cover over-allotments, if any.
The underwriters expect to deliver the shares on or
about
2010.
MDB Capital Group
LLC
Feltl and Company
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The date of this prospectus
is ,
2010.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains, and may incorporate by reference,
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, or
Securities Act, and Section 21E of the Securities Exchange
Act of 1934, as amended, or Exchange Act. You can find many (but
not all) of these statements by looking for words such as
“approximates,” “believes,”
“hopes,” “expects,” “anticipates,”
“estimates,” “projects,”
“intends,” “plans,” “would,”
“should,” “could,” “may,”
“will” or other similar expressions in this
prospectus. These forward-looking statements are subject to
certain risks and uncertainties that could cause actual results
to differ materially from our historical experience and our
present expectations or projections. Factors that could cause
actual results to differ from those discussed in the
forward-looking statements include, but are not limited to:
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Our limited cash and a history of losses;
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The limited number of potential customers;
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The limited number of suppliers for some of our components;
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There being no significant backlog from quarter to quarter;
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Our market being characterized by rapidly advancing technology;
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Fluctuations in product demand from quarter to quarter;
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The impact of competitive filter products, technologies and
pricing;
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Manufacturing capacity constraints and difficulties;
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Local, regional, national and international economic conditions
and events and the impact they may have on us and our customers,
such as the current worldwide recession;
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Political instability, acts of war or terrorism, or natural
disasters;
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Continued volatility in the credit and equity markets and the
resulting effect on the general economy; and
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Our success at managing the risks involved in the foregoing
items.
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The forward-looking statements are based upon management’s
beliefs and assumptions and are made as of the date of this
prospectus. We claim the protection of the safe harbor contained
in the Private Securities Litigation Reform Act of 1995. We
undertake no obligation to publicly update or revise any
forward-looking statements included or incorporated by reference
in this prospectus or to update the reasons why actual results
could differ from those contained in such statements, whether as
a result of new information, future events or otherwise, except
to the extent required by federal securities laws.
Forward-looking statements may be contained in this prospectus
(and the documents incorporated by reference herein) under
“Risk Factors,” or may be contained in our Annual
Report on
Form 10-K
or in our Quarterly Reports on
Form 10-Q
under headings such as “Management’s Discussion and
Analysis of Financial Conditions and Results of Operations”
and “Business,” or in our Current Reports on
Form 8-K,
among other places. Any investor in us should consider all risks
and uncertainties disclosed in our filings with the Securities
and Exchange Commission, or the SEC, described below under the
heading “Where You Can Find More Information,” all of
which are accessible on the SEC’s website at www.sec.gov.
ABOUT
THIS PROSPECTUS
You should rely only on the information contained or
incorporated by reference in this prospectus. We have not, and
the underwriters have not, authorized any person to provide you
with different or inconsistent information. If anyone provides
you with different or inconsistent information, you should not
rely on it. We are not, and the underwriters are not, making an
offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the
information appearing in this prospectus and the documents
incorporated by reference is accurate only as of their
respective dates. Superconductor Technology Inc.’s
business, financial condition, results of operations and
prospects may have changed since such dates.
ii
Unless otherwise indicated or unless the context requires
otherwise, all references in this prospectus to
“Superconductor Technology Inc.,” “STI,” the
“Company,” “we,” “us,”
“our,” or similar references, mean Superconductor
Technology Inc. and its subsidiaries on a consolidated basis.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy statements
and other information with the SEC. Our SEC filings are
available to the public over the Internet at the SEC’s web
site at www.sec.gov and on the investor relations page of our
website at www.suptech.com. Information on our web site is not
part of this prospectus. You may also read and copy any document
we file with the SEC at its public reference facilities at
100 F Street N.E., Washington, D.C. 20549. You
can also obtain copies of the documents upon the payment of a
duplicating fee to the SEC. Please call the SEC at
1-800-SEC-0330
for further information on the operation of the public reference
facilities.
This prospectus omits some information contained in the
registration statement in accordance with SEC rules and
regulations. You should review the information and exhibits
included in the registration statement for further information
about us and the securities we are offering. Statements in this
prospectus concerning any document we filed as an exhibit to the
registration statement or that we otherwise filed with the SEC
are not intended to be comprehensive and are qualified by
reference to these filings. You should review the complete
document to evaluate these statements.
The SEC allows us to “incorporate by reference”
information we file with it, which means that we can disclose
important information to you by referring you to other
documents. The information incorporated by reference is
considered to be a part of this prospectus. Information
contained in this prospectus supersedes information incorporated
by reference that we have filed with the SEC prior to the date
of this prospectus.
We incorporate by reference the following documents listed
below, except to the extent that any information contained in
such filings is deemed “furnished” in accordance with
SEC rules:
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Our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009, filed with the
SEC on March 17, 2010, including portions incorporated by
reference therein to our Definitive Proxy Statement on
Schedule 14A, filed with the SEC on April 2, 2010;
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Our Quarterly Report on
Form 10-Q
for the fiscal quarter ended April 3, 2010, as filed with
the SEC on May 5, 2010; and
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Our Current Reports on
Form 8-K
filed with the SEC on April 2, 2010 and May 10, 2010.
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These documents contain important information about us, our
business and our financial condition. You may request a copy of
these filings, at no cost, by writing or telephoning us at:
Superconductor Technologies Inc.
460 Ward Drive
Santa Barbara, CA
93111-2310
(805) 690-4500
iii
PROSPECTUS
SUMMARY
This summary highlights selected information contained
elsewhere or incorporated by reference in this prospectus and
may not contain all the information that you need to consider in
making your investment decision. You should carefully read this
entire prospectus, as well as the information to which we refer
you and the information incorporated by reference herein, before
deciding whether to invest in the common stock. You should pay
special attention to the “Risk Factors” section of
this prospectus to determine whether an investment in the common
stock is appropriate for you.
About
Superconductor Technologies Inc.
We are a global leader in high temperature superconductor (HTS)
materials and related technologies. HTS materials have the
unique ability to conduct electrical current with little or no
resistance when cooled to very low “critical”
temperatures. As a result, HTS materials can substantially
improve the performance of electrical systems by reducing the
power loss and minimizing heat generation caused when electrical
currents flow through conventional conductors. To obtain these
benefits on a cost-effective basis, we have developed patented
and proprietary technologies relating to matters such as thin
film deposition manufacturing, cryogenic cooling and radio
frequency (RF) circuit filter tuning. We have had over
$150 million in HTS sales to date, with over 6,000 of our
commercial systems deployed worldwide. We are now pursuing new
applications in HTS wire and tunable handset filters, as well as
expanding our existing applications in the next generation of
wireless networks.
Our
Proprietary Technologies
We focus on research and development to maintain our
technological edge in solving the technical challenges in
commercializing HTS technology. Many of our employees hold
advanced degrees in physics, materials science, electrical
engineering and other related fields. Our development efforts
have yielded an extensive patent portfolio as well as critical
trade secrets, unpatented technology and proprietary knowledge.
As of April 3, 2010, our 58 U.S. patents, 21 pending
U.S. patent applications, 19 foreign patents and 60 pending
foreign patent applications covered matters including
superconducting technologies, the production of thin film
materials and structures, cryogenics systems and packaging,
advanced circuit design and tunable RF filters. Our patented
RCE-CDR HTS thin film deposition manufacturing process can
produce HTS materials of the highest quality with an
order-of-magnitude cost advantage over competing approaches. Our
proprietary and patented cryocoolers provide us with a
significant competitive advantage by maintaining our HTS
materials at their critical temperatures, having demonstrated a
mean-time-between-failure through field and in-house lifetime
tests of over one million hours without scheduled maintenance.
Our technology also permits us to design and fabricate extremely
small, high-performance circuits, including HTS circuits, to
remove interference inherent in some RF signals.
Our
Target Markets
We are currently focusing our efforts on applications of our
proprietary HTS technology in the following areas:
Superconducting
Power Applications
We are adapting our patented HTS material deposition techniques
to develop energy efficient, cost-effective and high performance
second generation (2G) HTS wire for existing and emerging power
applications. HTS wire enables greater electrical current
carrying capacity than comparable size copper wires,
dramatically reducing the volume and weight of the required
wire. To date, the market for 2G HTS wire has been limited by
the inability of the existing suppliers to establish production
processes that are capable of producing wire that meets target
specifications and cost requirements. STI plans to utilize its
patented and proprietary manufacturing methods to overcome these
challenges and make the HTS wire cost-effective in a number of
applications.
To accelerate our efforts in the development and manufacturing
processes for our 2G HTS wire, we have established a Cooperative
Research and Development Agreement (CRADA) with Los Alamos
National Laboratory and have partnered with other HTS industry
leaders. After successfully producing 2G HTS wire in one meter
lengths, we are now completing the design of a wire deposition
machine to produce 50 meter lengths, with the goal of producing
one kilometer lengths in our production machine. Assuming we
overcome the technical hurdles, we intend to be a supplier of
HTS wire to manufacturing concerns, primarily large businesses,
which would incorporate
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the wire into their products. We expect to begin delivering
samples of our 2G HTS wire before year end for testing by
prospective customers, at which time we can begin to formalize
our commercial relationships.
We are initially targeting markets where we believe the
advantages of HTS wire are at a premium, such as:
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Wind Turbines: Current wind turbine power
generating capacity is limited by the size and weight of the
generator. Turbine manufacturers believe that building a
generator utilizing HTS wire will reduce its size and weight
sufficiently to enable the development of 10 megawatt (MW) and
larger wind turbines. According to Emerging Energy Research,
2731 MW of worldwide offshore capacity of wind turbines
producing more than 5 MW is expected to be installed in
2016, which will rise to nearly 5377 MW in 2020. Using a
current estimated installed offshore cost of $2 million per
MW, this translates into an investment for 5 MW capacity or
larger wind turbines of approximately $5.5 billion in 2016
and nearly $11 billion in 2020.
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Power Cables: Because they can carry
significantly more electrical current with less electrical loss
than conventional cables, HTS power cables allow utilities to
deliver significantly more electrical current utilizing existing
power cable entry facilities in office buildings and other
facilities with large and growing power requirements.
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Fault Current Limiters: A fault current
limiter is a device in a power transmission network which cuts
off electrical flow in the same manner as a ground fault
interrupter in the home. By eliminating the superconductor
properties of the HTS wire when too much electricity is flowing,
the resistance in the fault current limiter can be substantially
increased, stopping current flow and preventing damage to the
rest of the power distribution network.
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Superconducting Magnetic Energy Storage
(SMES): As renewable energy generating systems
continue to proliferate, the power grid needs reliable power
backup to offset the intermittent nature of those systems. The
low power loss from HTS wire could be used to provide an
alternative to chemical and other forms of current battery
technology for energy storage.
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Magnetic Resonance Imaging (MRI): MRI machines
used for medical imaging already use existing low temperature
superconducting wire; the improvements targeted for 2G HTS wire
may enable the manufacturers of MRI machines to reduce the
initial cost and operating expenses of these devices.
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Industrial Motors and Generators: The reduced
weight and size required for a generator built with HTS wire
could enable motors and generators to generate two to three
times the power as existing generators of the same size.
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Tunable
Filter Products
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We have developed and patented several techniques to allow a
single HTS or conventional (SAW or BAW) RF filter to be
“tuned” between multiple frequency bands. Current cell
phone handsets generally utilize two or three discrete filters
for each frequency band, and thus require ten or more filters in
each handset to enable seamless worldwide coverage with
today’s five bands. However, with the forecasted growth in
the future generations of cell phones to ten or more bands, a
discrete filter approach would be both expensive and occupy
scarce space in the handset. To address this challenge, we are
pursuing opportunities with existing wireless handset module
providers to incorporate tunable filters into future generations
of smart phones. These tunable filters will allow significant
reduction in size, power, and cost over conventional discrete
filter technologies.
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Wireless
Networks
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Our current commercial products help maximize the performance of
wireless telecommunications networks by improving the quality of
uplink signals from mobile wireless devices. Our products
increase capacity utilization, lower dropped and blocked calls,
extend coverage, and enable higher wireless data throughput,
while reducing capital and operating costs for the carrier.
While we continue to serve the market for retrofitting existing
towers, we are currently pursuing an opportunity to include our
HTS filters in the Long Term Evolution (LTE) data networks now
being deployed by the top U.S. wireless carriers (expected
to be
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over 75,000 base stations in the next few years). Our HTS
filters have been incorporated into one of the two base station
solutions selected by a major carrier for live market trials
currently planned for 2010.
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Corporate
Information
Our facilities and executive offices are located at 460 Ward
Drive, Santa Barbara, California 93111, and our telephone
number is
(805) 690-4500.
We were incorporated in Delaware on May 11, 1987.
Additional information about us is available on our website at
www.suptech.com. The information contained on or that may be
obtained from our website is not, and shall not be deemed to be,
a part of this prospectus. Our common stock is currently traded
on the NASDAQ Capital Market under the symbol “SCON.”
Risk
Factors
An investment in our common stock involves certain risks. You
should carefully consider the risks described under “Risk
Factors” beginning on page 6 of this prospectus, as
well as other information included or incorporated by reference
into this prospectus, including our consolidated financial
statements and the notes thereto, before making an investment
decision.
The
Offering
The following summary contains basic information about the
offering and the common stock and is not intended to be
complete. It does not contain all the information that is
important to you. For a more complete understanding of the
common stock, please refer to the section of this prospectus
entitled “Description of Capital Stock.”
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Issuer |
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Superconductor Technologies Inc., a Delaware corporation. |
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Common stock offered |
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10,000,000 shares of common stock, par value $0.001 per
share. |
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Over-allotment option |
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We have granted the underwriters an option to purchase up to an
additional 1,500,000 shares of common stock within
45 days of the date of this prospectus in order to cover
over-allotments, if any. |
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Common stock outstanding after this offering |
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32,647,011 shares of common stock.(1)(2) |
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Use of Proceeds |
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We intend to use the net proceeds from the sale of our common
stock in this offering for general corporate purposes. |
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Market and trading symbol for the common stock |
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Our common stock is listed and traded on the NASDAQ Capital
Market under the symbol “SCON.” |
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The number of shares of common stock outstanding immediately
after the closing of this offering is based on
22,647,011 shares of common stock outstanding as of
June 28, 2010, and, as of that date, excluded: |
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• 6,115,230 shares of our common stock issuable
upon conversion of the 611,523 shares of outstanding
Series A Preferred Stock;
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• 1,149,998 shares of our common stock issuable
upon exercise of stock options under our stock plans at a
weighted average exercise price of $7.97 per share;
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• 618,237 shares of our common stock reserved for
issuance under various outstanding warrant agreements, at a
weighted average exercise price of $6.45 per share, which, as a
result of adjustment provisions under such warrant agreements,
will represent the right to
acquire shares of our common stock
at a weighted average exercise price of
$ immediately following the
closing of the offering; and
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• 1,850,468 shares of our common stock reserved
for future issuance under our 2003 Equity Incentive Plan.
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Unless otherwise specifically stated, information throughout
this prospectus assumes that none of our outstanding options or
warrants to purchase shares of our common stock are exercised. |
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Unless otherwise indicated, the number of shares of common stock
presented in this prospectus excludes shares issuable pursuant
to the exercise of the underwriters’ over-allotment option. |
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SUMMARY
SELECTED CONSOLIDATED FINANCIAL INFORMATION
You should read the summary selected consolidated financial
information presented below in conjunction with the
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” section and our
financial statements and the notes to those consolidated
financial statements appearing in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009, which is
incorporated by reference in this prospectus.
The following tables set forth selected consolidated financial
data for us at and for each of the years in the five-year period
ended December 31, 2009 and at and for the three month
periods ended April 3, 2010 and March 28, 2009.
The selected statement of income data for the years ended
December 31, 2009, 2008 and 2007, and the selected
statement of financial condition data as of December 31,
2009 and 2008, have been derived from our audited consolidated
financial statements included in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009, which is
incorporated by reference in this prospectus. The selected
statement of income data for the years ended December 31,
2006 and 2005 and the summary statement of financial condition
data as of December 31, 2007, 2006 and 2005 have been
derived from our audited consolidated financial statements that
are not included in this prospectus.
The summary financial data at and for the three months period
ended April 3, 2010 and March 28, 2009 have been
derived from our unaudited interim consolidated financial
statements included in our Quarterly Reports on
Form 10-Q
for the fiscal quarters ended April 3, 2010 and
March 28, 2009, respectively, and are incorporated by
reference in this prospectus. These unaudited interim
consolidated financial statements include all adjustments
(consisting only of normal recurring adjustments) that we
consider necessary for a fair presentation of our financial
condition and results of operations as of the dates and for the
periods indicated. Historical results are not necessarily
indicative of future results and the results for the three
months ended April 3, 2010 are not necessarily indicative
of our expected results for the full year ending
December 31, 2010.
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At or For the
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Three Months
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Ended April 3, 2010
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and March 28, 2009
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Years Ended December 31,
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2010
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2009
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2009
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2008
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2007
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2006
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2005
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(In thousands, except per share amounts)
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Statement of Operations Data:
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|
|
|
|
|
|
|
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net commercial product revenues
|
|
$
|
2,334
|
|
|
$
|
1,131
|
|
|
$
|
7,239
|
|
|
$
|
6,768
|
|
|
$
|
12,787
|
|
|
$
|
17,697
|
|
|
$
|
21,080
|
|
Government and other contract revenues
|
|
|
1,081
|
|
|
|
546
|
|
|
|
3,577
|
|
|
|
4,525
|
|
|
|
5,115
|
|
|
|
3,361
|
|
|
|
3,107
|
|
Sub license royalties
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
|
3,415
|
|
|
|
1,677
|
|
|
|
10,816
|
|
|
|
11,293
|
|
|
|
17,902
|
|
|
|
21,078
|
|
|
|
24,209
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of commercial product revenues
|
|
|
2,386
|
|
|
|
1,797
|
|
|
|
9,102
|
|
|
|
8,911
|
|
|
|
12,944
|
|
|
|
15,922
|
|
|
|
18,989
|
|
Cost of government and other contract revenues
|
|
|
774
|
|
|
|
569
|
|
|
|
2,552
|
|
|
|
3,649
|
|
|
|
2,906
|
|
|
|
2,407
|
|
|
|
2,806
|
|
Other research and development
|
|
|
1,010
|
|
|
|
1,084
|
|
|
|
4,399
|
|
|
|
3,394
|
|
|
|
3,172
|
|
|
|
3,488
|
|
|
|
4,214
|
|
Selling, general and administrative
|
|
|
1,783
|
|
|
|
1,723
|
|
|
|
6,925
|
|
|
|
8,151
|
|
|
|
8,123
|
|
|
|
9,086
|
|
|
|
11,442
|
|
Restructuring expenses and impairment charges
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
141
|
|
|
|
—
|
|
|
|
38
|
|
|
|
1,197
|
|
Write off of Goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,107
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
|
5,953
|
|
|
|
5,173
|
|
|
|
22,978
|
|
|
|
24,246
|
|
|
|
27,145
|
|
|
|
51,048
|
|
|
|
38,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(2,538
|
)
|
|
|
(3,496
|
)
|
|
|
(12,162
|
)
|
|
|
(12,953
|
)
|
|
|
(9,243
|
)
|
|
|
(29,970
|
)
|
|
|
(14,439
|
)
|
Other income (expense), net
|
|
|
36
|
|
|
|
(46
|
)
|
|
|
(817
|
)
|
|
|
252
|
|
|
|
117
|
|
|
|
346
|
|
|
|
226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,502
|
)
|
|
$
|
(3,542
|
)
|
|
$
|
(12,979
|
)
|
|
$
|
(12,701
|
)
|
|
$
|
(9,126
|
)
|
|
$
|
(29,624
|
)
|
|
$
|
(14,213
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
|
(0.11
|
)
|
|
|
(0.20
|
)
|
|
|
(0.65
|
)
|
|
|
(0.77
|
)
|
|
|
(0.73
|
)
|
|
|
(2.37
|
)
|
|
|
(1.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares Outstanding
|
|
|
21,809
|
|
|
|
17,869
|
|
|
|
19,843
|
|
|
|
16,403
|
|
|
|
12,488
|
|
|
|
12,483
|
|
|
|
11,419
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or For the
|
|
|
|
|
|
|
Three Months
|
|
|
|
|
|
|
Ended April 3, 2010
|
|
|
|
|
|
|
and March 28, 2009
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
8,535
|
|
|
$
|
5,077
|
|
|
$
|
10,365
|
|
|
$
|
7,569
|
|
|
$
|
3,939
|
|
|
$
|
5,487
|
|
|
$
|
13,018
|
|
Working capital
|
|
|
9,882
|
|
|
|
9,407
|
|
|
|
12,557
|
|
|
|
12,253
|
|
|
|
3,293
|
|
|
|
10,158
|
|
|
|
17,218
|
|
Total assets
|
|
|
15,892
|
|
|
|
16,308
|
|
|
|
18,126
|
|
|
|
19,358
|
|
|
|
16,625
|
|
|
|
21,904
|
|
|
|
52,045
|
|
Long-term debt, including current portion
|
|
|
571
|
|
|
|
522
|
|
|
|
576
|
|
|
|
521
|
|
|
|
563
|
|
|
|
618
|
|
|
|
33
|
|
Total stockholders’ equity
|
|
$
|
13,400
|
|
|
$
|
14,270
|
|
|
$
|
16,241
|
|
|
$
|
17,552
|
|
|
$
|
9,190
|
|
|
$
|
17,951
|
|
|
$
|
47,257
|
|
5
RISK
FACTORS
Investment in our common stock involves a high degree of
risk. You should carefully consider the risks described below,
as well as those risks described in the sections entitled
“Risk Factors” and “Management’s Discussion
and Analysis of Financial Condition and Results of
Operations,” each contained in our most recent Annual
Report on
Form 10-K
for the year ended December 31, 2009, which has been filed
with the SEC and is incorporated herein by reference in its
entirety, as well as other information in this prospectus or in
any other documents incorporated by reference. Each of the risks
described in these sections and documents could adversely affect
our business, financial condition, results of operations and
prospects, and could result in a complete loss of your
investment. This prospectus and the incorporated documents also
contain forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from
those anticipated in these forward-looking statements as a
result of certain factors, including the risks mentioned
above.
Risks
Related to Our Business
We
have a history of losses and may never become
profitable.
In each of our last five years, we have experienced significant
net losses and negative cash flows from operations. For the
three-month period ended April 3, 2010, we incurred a net
loss of $2.5 million and had negative cash flows from
operations of $1.2 million. For the fiscal year ended
December 31, 2009, we incurred a net loss of
$13.0 million and had negative cash flows from operations
of $7.4 million. For the fiscal year ended
December 31, 2008, we incurred a net loss of
$12.7 million and had negative cash flows from operations
of $12.1 million. Moreover, our revenues have declined
significantly from 2005, and we do not expect them to recover
unless our new initiatives succeed. Our independent registered
public accounting firm has included in its audit reports an
explanatory paragraph expressing doubt about our ability to
continue as a going concern. If we fail to increase our
revenues, we may not achieve and maintain profitability and may
not meet our expectations or the expectations of financial
analysts who report on our stock.
Current
worldwide economic conditions may adversely affect our business,
operating results and financial condition.
The United States economy has recently experienced, and
continues to experience, a financial downturn, with some
financial and economic analysts predicting that the world
economy may be entering into a prolonged economic downturn
characterized by high unemployment, limited availability of
credit, increased rates of default and bankruptcy, and decreased
consumer and business spending. These developments could
negatively affect our business, operating results and financial
condition in a number of ways. For example, current or potential
customers may delay or decrease spending with us or may not pay
us, or may delay paying us for previously purchased products. In
addition, this downturn has had, and may continue to have, an
unprecedented negative impact on the global credit markets.
Credit has tightened significantly in the last several months,
resulting in financing terms that are less attractive to
borrowers, and in many cases, the unavailability of certain
types of debt financing. If this crisis continues or worsens,
and if we are required to obtain financing in the near term to
meet our working capital or other business needs, we may not be
able to obtain that financing. Further, even if we are able to
obtain the financing we need, it may be on terms that are not
favorable to us, with increased financing costs and restrictive
covenants.
We may
need to raise additional capital, and if we are unable to raise
capital our ability to implement our current business plan and
ultimately our viability as a company could be adversely
affected.
At April 3, 2010, we had $8.5 million in cash
compared to $10.4 million in cash at December 31,
2009. We believe the key factors to our future liquidity will be
our ability to successfully utilize our expertise and technology
to generate revenues in various ways, including commercial
operations, government contracts, joint ventures and licenses.
Because of the uncertainty of these factors, we may need to
raise funds to meet our working capital needs.
We cannot assure you that additional financing will be available
on acceptable terms or at all. If we issue additional equity
securities to raise funds, the ownership percentage of our
existing stockholders would be reduced. New investors may demand
rights, preferences or privileges senior to those of existing
holders of common stock. If we cannot raise any needed funds, we
might be forced to make further substantial reductions in our
operating
6
expenses, which could adversely affect our ability to implement
our current business plan and ultimately our viability as a
company.
We
face competition with respect to various aspects of our
technology and product development.
Our current products compete based on performance,
functionality, reliability, pricing, quality and compliance with
industry standards. Our current and potential competitors
include conventional RF filter manufacturers (including
CommScope, ADC Telecommunications (ADC), Powerwave Technologies,
and Radio Frequency Systems (RFS)) and both established and
newly emerging companies developing similar or competing HTS
technologies. We also compete with companies that design,
manufacture and sell antenna-optimizing multiplexers and
companies that seek to enhance base station range and
selectivity by means other than a superconducting filter,
including many original equipment manufacturers such as Ericsson
and Nokia. In addition, we currently supply components and
license technology to several companies that may eventually
decide to manufacture or design their own HTS components, rather
than purchasing or licensing our technology. With respect to our
HTS materials, we compete with American Superconductor,
SuperPower and THEVA, among others. In the government sector, we
compete with universities, national laboratories and both large
and small companies for research and development contracts, and
with larger defense contractors, such as Raytheon and Northrop
Grumman, for government products. If we are unable to compete
successfully against our current or future competitors, then our
business and results of operations will be adversely affected.
Our
ability to protect our patents and other proprietary rights is
uncertain, exposing us to possible losses of competitive
advantage.
Our efforts to protect our proprietary rights may not succeed in
preventing infringement by others or ensure that these rights
will provide us with a competitive advantage. Pending patent
applications may not result in issued patents and the validity
of issued patents may be subject to challenge. Third parties may
also be able to design around the patented aspects of the
products. Additionally, certain of the issued patents and patent
applications are owned jointly with third parties. Because any
owner or co-owner of a patent can license its rights under
jointly-owned patents or applications, inventions made by us
jointly with others are not subject to our exclusive control.
Any of these possible events could result in losses of
competitive advantage.
We
depend on specific patents and licenses to technologies, and we
will likely need additional technologies in the future that we
may not be able to obtain.
We utilize technologies under licenses of patents from others
for our products. These patents may be subject to challenge,
which may result in significant litigation expense (which may or
may not be recoverable against future royalty obligations).
Additionally, we continually try to develop new products, and,
in the course of doing so, we may be required to utilize
intellectual property rights owned by others and may seek
licenses to do so. Such licenses may not be obtainable on
commercially reasonable terms, or at all. It is also possible
that we may inadvertently utilize intellectual property rights
held by others, which could result in substantial claims.
Intellectual
property infringement claims against us could materially harm
results of operations.
Our products incorporate a number of technologies, including
high-temperature superconductor technology, technology related
to other materials, and electronics technologies. Our patent
positions, and that of other companies using high-temperature
superconductor technology, is uncertain and there is significant
risk that others, including our competitors or potential
competitors, have obtained or will obtain patents relating to
our products or technologies or products or technologies planned
to be introduced by us.
We believe that patents may be or have been issued, or
applications may be pending, claiming various compositions of
matter used in our products. We may need to secure one or more
licenses of these patents. There can be no assurances that such
licenses could be obtained on commercially reasonable terms, or
at all. We may be required to expend significant resources to
develop alternatives that would not infringe such patents or to
obtain licenses to the related technology. We may not be able to
successfully design around these patents or obtain licenses to
them and may have to defend ourselves at substantial cost
against allegations of infringement of third party
7
patents or other rights to intellectual property. In those
circumstances, we could face significant liabilities and also be
forced to cease the use of key technology.
Other
parties may have the right to utilize technology important to
our business.
We utilize certain intellectual property rights under
non-exclusive licenses or have granted to others the right to
utilize certain intellectual property rights licensed from a
third party. Because we may not have the exclusive rights to
utilize such intellectual property, other parties may be able to
compete with us, which may harm our business.
We may
not be able to attain the performance required for our
superconducting wire at the cost we expect.
Existing and emerging applications for superconducting wire
require certain physical performance characteristics. The two
primary specifications consist of the current handling capacity
of the wire and its ability to operate effectively in the
presence of a magnetic field. In order to attain the performance
requirements for the various applications we are pursuing, we
need to alter the thickness and composition of the wire’s
HTS materials. Such applications serve a unique market that
dictates the price our customers will be willing to pay for our
product. Our costs to build the superconducting wire for an
application may result in our wire technology not being a viable
alternative to customers.
The
market price for superconducting wire may decrease significantly
in the next several years.
The current and expected market price over the next several
years for superconducting wire makes it an attractive business
opportunity. The market price estimates are driven by several
primary factors, including the underlying cost to produce the
superconducting wire by existing suppliers and its relative
scarcity due to current manufacturing limitations. Significant
changes in either of those factors could reduce the market price
for superconducting wire to levels that are lower than currently
anticipated. A change of this nature could make the
superconducting wire business opportunity less attractive.
Our
efforts to increase the output of our HTS deposition process may
be unsuccessful.
The amount of HTS material necessary for us to deliver
commercial volumes of superconducting wire is significantly
greater than our current capacity. Our superconducting wire
production machine is designed to deposit significantly more HTS
material than our current wafer manufacturing machine. This
increase is necessary to attain our production goals for
superconducting wire. We currently believe that by the end of
2013, our production machine for superconducting wire may be
able to produce up to 750 kilometers of wire annually. However,
there are no guarantees that we will be successful in our
efforts to expand our output by such an extent. The associated
increase in the amount of HTS material required to expand our
level of output requires us to design a new source material
arrangement to meet this requirement. While we believe that we
have a solution to effectively address these expanded material
volume requirements, we may be unsuccessful in the
implementation of this design.
The
adaptation of our HTS deposition process to the manufacturing of
superconducting wire may take longer than
anticipated.
Our HTS material deposition process for wafer manufacturing is
being adapted to the production of superconducting wire. We are
creating new machines that modify the deposition zone and
implement a mechanism for feeding the wire substrate in a manner
that allows us to manufacture kilometer lengths of
superconducting wire. While the material deposition process is
essentially the same, the physical handling of the substrate is
significantly changed and requires sophisticated mechanical
processes. The time required to implement these new designs may
take longer than anticipated which would delay our entry into
the superconducting wire market.
8
The
current applications envisioned for superconducting wire may not
develop in the expected timeframe or at all, and we are
dependent on the efforts of third party creators and
manufacturers in the development of such
applications.
Many of the existing and emerging applications for
superconducting wire are in the early stages of development. We
are dependent on the creators and manufacturers for applications
such as superconducting AC power cable, fault current limiters,
large wind turbines (5 MW+), and other applications. The
final development of these new products may not meet our
expected timeframes, which would have a negative effect on the
market for superconducting wire.
We
rely on a small number of customers for the majority of our
commercial revenues, and the loss of any one of these customers,
or a significant loss, reduction or rescheduling of orders from
any of these customers, could have a material adverse effect on
our business, results of operations and financial
condition.
We sell most of our products to a small number of wireless
carriers. We derived 92% of our commercial product revenues from
Verizon Wireless and AT&T in both 2009 and 2008. We derived
75% of our commercial product revenues from Verizon Wireless and
AT&T in 2007. Our future success depends upon the wireless
carriers continuing to purchase our products, and fluctuations
in demand from such customers could negatively impact our
results. Unanticipated demand fluctuations can have a negative
impact on our revenues and business and an adverse effect on our
results of operations and financial condition.
In addition, our dependence on a small number of major customers
exposes us to numerous other risks, including:
|
|
|
|
•
|
a slowdown or delay in the deployment, upgrading or improvement
of wireless networks by any one customer could significantly
reduce demand for our products;
|
|
|
•
|
reductions in a single customer’s forecasts and demand
could result in excess inventories;
|
|
|
•
|
each of our customers has significant purchasing leverage over
us to require changes in sales terms including pricing, payment
terms and product delivery schedules; and
|
|
|
•
|
concentration of accounts receivable credit risk, which could
have a material adverse effect on our liquidity and financial
condition if one of our major customers declared bankruptcy or
delayed payment of their receivables.
|
Many of our customers also provide minimal lead-time prior to
the release of their purchase orders and have non-binding
commitments to purchase from us. If we fail to forecast our
customer’s demands accurately, we could experience delays
in manufacturing, which could result in customer
dissatisfaction. Additionally, these factors further impact our
ability to forecast future revenue.
The
wireless communication industry is highly concentrated, which
limits the number of potential customers, and further industry
consolidation could result in the loss of key
customers.
The wireless communication industry is highly concentrated in
nature and may become more concentrated due to anticipated
industry consolidation. As a result, we believe that the number
of potential customers for our products may be limited. We also
face significant risks in the event any of our key customers is
acquired by a company that has not adopted our technology or not
adopted it to the same extent. In that event, we could face a
significant decline in our sales to the acquired customer.
We
experience significant fluctuations in sales and operating
results from quarter to quarter.
Our quarterly results fluctuate due to a number of factors,
including:
|
|
|
|
•
|
the lack of any contractual obligation by our customers to
purchase their forecasted demand for our products;
|
|
|
•
|
variations in the timing, cancellation, or rescheduling of
customer orders and shipments; and
|
9
|
|
|
|
•
|
high fixed expenses that may disproportionately impact operating
expenses, especially during a quarter with a sales shortfall.
|
The nature of our business requires that we promptly ship
products after we receive orders. This means that we typically
do not have a significant backlog of unfilled orders at the
start of each quarter. Our major customers generally have no
contractual obligation to purchase forecasted amounts and may
cancel orders, change delivery schedules or change the mix of
products ordered with minimal notice and minimal penalty. As a
result of these factors, we may not be able to accurately
predict our quarterly sales. Any shortfall in sales relative to
our quarterly expectations or any delay of customer orders would
adversely affect our revenues and results of operations.
Order deferrals and cancellations by our customers, declining
average sales prices, changes in the mix of products sold,
increases in inventory and finished goods, delays in the
introduction of new products and longer than anticipated sales
cycles for our products have, in the past, adversely affected
our results of operations. Despite these factors, we maintain
significant finished goods,
work-in-progress
and raw materials inventory to meet estimated order forecasts.
If our customers purchase less than the forecasted amounts or
cancel or delay existing purchase orders, there will be higher
levels of inventory that face a greater risk of obsolescence. If
our customers desire to purchase products in excess of the
forecasted amounts or in a different product mix, there may not
be enough inventory or manufacturing capacity to fill their
orders.
Due to these and other factors, our past results may not be
reliable indicators of our future performance. Future revenues
and operating results may not meet the expectations of stock
analysts and investors. In either case, the price of our common
stock could be materially adversely affected.
Our
sales cycles are unpredictable, making future performance
uncertain.
The sales cycle for telecommunications products includes
identification of decision makers within the customers’
organizations, development of an understanding of
customer-specific performance and economic issues, convincing
the customer through field trial reports of the benefits of
systems offered, negotiation of purchase orders and deployment.
Customers who purchase our systems must commit a significant
amount of capital and other resources. Our customers must
consider budgetary constraints, comply with internal procedures
for approving large expenditures and complete whatever testing
is necessary for them to integrate new technologies that will
impact their key operations. Customer delays can lengthen the
sales cycles and have a material adverse effect on our business.
We
depend on the capital spending patterns of wireless network
operators, and if capital spending is decreased or delayed, our
business may be harmed.
Because we rely on wireless network operators for product
purchases, any substantial decrease or delay in capital spending
patterns in the wireless communication industry may harm our
business. Demand from customers for our products depends to a
significant degree upon the amount and timing of capital
spending by these customers for constructing, rebuilding or
upgrading their systems. The capital spending patterns of
wireless network operators depend on a variety of factors,
including access to financing, the status of federal, local and
foreign government regulation and deregulation, changing
standards for wireless technology, overall demand for wireless
services, competitive pressures and general economic conditions.
In addition, capital spending patterns in the wireless industry
can be subject to some degree of seasonality, with lower levels
of spending in the first and third calendar quarters, based on
annual budget cycles.
Our
reliance on a limited number of suppliers and the long lead time
of components for our products could impair our ability to
manufacture and deliver our systems on a timely
basis.
A number of components used in our products are available from a
limited number of outside suppliers due to unique designs as
well as certain quality and performance requirements. There are
components that we source from a single vendor due to the
present volume. Key components of our conventional products are
manufactured by a sole foreign manufacturer. Our reliance on
sole or limited source suppliers involves certain risks and
uncertainties, many of which are beyond our control. These
include the possibility of a shortage or the discontinuation of
certain key components. Any reduced availability of these parts
or components when required could impair our ability to
10
manufacture and deliver our systems on a timely basis and result
in the delay or cancellation of orders, which could harm our
business.
In addition, the purchase of some of our key components involves
long lead times and, in the event of unanticipated increases in
demand for our solutions, we may be unable to obtain these
components in sufficient quantities to meet our customers’
requirements. We do not have guaranteed supply arrangements with
any of these suppliers, do not maintain an extensive inventory
of parts or components and customarily purchase sole or limited
source parts and components pursuant to purchase orders.
Business disruptions, quality issues, production shortfalls or
financial difficulties of a sole or limited source supplier
could materially and adversely affect us by increasing product
costs, or eliminating or delaying the availability of such parts
or components. In such events, our inability to develop
alternative sources of supply quickly and on a cost-effective
basis could impair our ability to manufacture and deliver our
systems on a timely basis and could harm our business.
Our
reliance on a limited number of suppliers exposes us to quality
control issues.
Our reliance on certain single-source and limited-source
components exposes us to quality control issues if these
suppliers experience a failure in their production process or
otherwise fail to meet our quality requirements. A failure in
single-source or limited-source components or products could
force us to repair or replace a product utilizing replacement
components. If we cannot obtain comparable replacements or
effectively return or redesign our products, we could lose
customer orders or incur additional costs, which could have a
material adverse effect on our gross margins and results of
operations.
We
expect decreases in average selling prices, requiring us to
reduce product costs in order to achieve and maintain
profitability.
The average selling price of our products has decreased over the
years. We anticipate customer pressure on our product pricing
will continue for the foreseeable future. We have plans to
further reduce the manufacturing cost of our products, but there
is no assurance that our future cost reduction efforts will keep
pace with price erosion. We will need to further reduce our
manufacturing costs through engineering improvements and
economies of scale in production and purchasing in order to
achieve adequate gross margins. We may not be able to achieve
the required product cost savings at a rate needed to keep pace
with competitive pricing pressure. Additionally, we may be
forced to discount future orders. If we fail to reach our cost
saving objectives or we are required to offer future discounts,
our business may be harmed.
We
currently rely on specific technologies and may not successfully
adapt to the rapidly changing wireless telecommunications
equipment market.
Wireless telecommunication equipment is characterized by rapidly
advancing technology. Our success depends upon our ability to
keep pace with advancing wireless technology, including
materials, processes and industry standards. For example, we had
to redesign our
SuperLink®
product to convert from thallium barium calcium copper oxide to
yttrium barium copper oxide in order to reduce the product cost
and compete with other technologies. However, even with the
lower cost HTS material,
SuperLink®
may not ultimately prove commercially competitive against other
current technologies or those that may be discovered in the
future.
We will have to continue to develop and integrate advances to
our core technologies. We will also need to continue to develop
and integrate advances in complementary technologies. We cannot
guarantee that our development efforts will not be rendered
obsolete by research efforts and technological advances made by
others.
Our
failure to anticipate and respond to developments in the
wireless telecommunications market could substantially harm our
business.
The dedication of our resources to the wireless
telecommunications market makes us potentially vulnerable to
changes in this market, such as new technologies like WIMAX,
future competition, changes in availability of capital resources
or regulatory changes that could affect the competitive position
and rate of growth of the wireless industry.
11
We may
not be able to compete effectively against alternative
technologies.
Our products compete with a number of alternative approaches and
technologies that increase the capacity and improve the quality
of wireless networks. Some of these alternatives may be more
cost-effective or offer better performance than our products.
Wireless network operators may opt to increase the number of
transmission stations, increase tower heights, install filters
and amplifiers at the top of towers or use advanced antenna
technology in lieu of purchasing our products. We may not
succeed in competing against these alternatives.
We
depend upon government contracts for a substantial amount of
revenue and our business may suffer if significant contracts are
terminated, adversely modified, or we are unable to win new
contracts.
We derive a substantial portion of our revenue from a few large
contracts with the U.S. government. As a result, a
reduction in, or discontinuance of, the government’s
commitment to current or future programs could materially reduce
government contract revenue. Contracts involving the
U.S. government may include various risks, including:
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termination by the government;
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reduction or modification in the event of changes in the
government’s requirements or budgetary constraints;
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increased or unexpected costs causing losses or reduced profits
under contracts where prices are fixed or unallowable costs
under contracts where the government reimburses for costs and
pays an additional premium;
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risks of potential disclosure of confidential information to
third parties;
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the failure or inability of the main contractor to perform its
contract in circumstances where we are a subcontractor;
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the failure of the government to exercise options for additional
work provided for in the contracts; and
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the government’s right in certain circumstances to freely
use technology developed under these contracts.
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The programs in which we participate may extend for several
years, but are normally funded on an annual basis. The
U.S. government may not continue to fund programs under
which we have entered into contracts. Even if funding is
continued, we may fail to compete successfully to obtain funding
within such programs.
All costs for services under government contracts are subject to
audit, and the acceptance of such costs as allowable and
allocable is subject to federal regulatory guidelines. We record
contract revenues in amounts that we expect to be realized upon
final audit settlement. Any disallowance of costs by the
government could have an adverse effect on our business,
operating results and financial condition. Audits and
adjustments may result in decreased revenues and net income for
those years. Additionally, because of our participation in
government contracts, we are subject to audit from time to time
for our compliance with government regulations by various
agencies. Government agencies may conduct inquiries or
investigations that may cover a broad range of activity.
Responding to any such audits, inquiries or investigations may
involve significant expense and divert management’s
attention. In addition, an adverse finding in any such audit,
inquiry or investigation could involve penalties that may harm
our business.
Because
competition for target employees is intense, we may be subject
to claims of unfair hiring practices, trade secret
misappropriation or other related claims.
Companies in the wireless telecommunications industry whose
employees accept positions with competitors frequently claim
that competitors have engaged in unfair hiring practices, trade
secret misappropriation or other related claims. We may be
subject to such claims in the future as we seek to hire
qualified personnel, and such claims may result in material
litigation. If this should occur, we could incur substantial
costs in defending against these claims, regardless of their
merits.
12
If we
are unable to forecast our inventory needs accurately, we may be
unable to obtain sufficient manufacturing capacity or may incur
unnecessary costs and produce excess inventory.
We forecast our inventory needs based on anticipated purchase
orders to determine manufacturing requirements. If we
overestimate demand, we may have excess inventory, and our
suppliers may as well, which could increase our costs. If we
underestimate our requirements, our suppliers may have
inadequate inventory, which could interrupt manufacturing and
result in delays in shipments and recognition of revenues. In
addition, lead times for ordering materials and components vary
significantly and depend on factors such as the specific
supplier, contract terms and demand for any component at a given
time. Accordingly, if we inaccurately forecast demand, we may be
unable to obtain adequate manufacturing capacity from our
suppliers to meet customers’ delivery requirements, which
would harm our business.
Our
success depends on the attraction and retention of senior
management and technical personnel with relevant
expertise.
As a competitor in a highly technical market, we depend heavily
upon the efforts of our existing senior management and technical
teams. The loss of the services of one or more members of these
teams could slow product development and commercialization
objectives. Due to the specialized nature of our products, we
also depend upon our ability to attract and retain qualified
technical personnel with substantial industry knowledge and
expertise. Competition for qualified personnel is intense, and
we may not be able to continue to attract and retain qualified
personnel necessary for the development of our business.
We have experienced difficulty recruiting senior management due
to the high cost of living in the Santa Barbara area. We
have a limited pool of qualified executives in
Santa Barbara and may attempt to recruit qualified
candidates from across the country. Some candidates have cited
the high cost of housing in Santa Barbara as a significant
negative factor when considering our employment offers. We have
mitigated this problem to a limited extent by allowing some
executives to maintain their existing residences in other parts
of the country and effectively “commute” to our
corporate headquarters in Santa Barbara as needed to
perform their duties. Regardless, we expect the cost of housing
in our area will continue to present a significant obstacle to
recruiting senior executives.
Regulatory
changes negatively affecting wireless communications companies
could substantially harm our business.
The Federal Communications Commission strictly regulates the
operation of wireless base stations in the United States. Other
countries also regulate the operation of base stations within
their territories. Base stations and equipment marketed for use
in base stations must meet specific technical standards. Our
ability to sell our high-temperature superconductor filter
subsystems will depend upon the rate of deployment of other new
wireless digital services, the ability of base station equipment
manufacturers and of base station operators to obtain and retain
the necessary approvals and licenses, and changes in regulations
that may impact the product requirements. Any failure or delay
of base station manufacturers or operators in obtaining
necessary approvals could harm our business.
We may
acquire or make investments in companies or technologies that
could cause loss of value to stockholders and disruption of
business.
We may explore opportunities to acquire companies or
technologies in the future. Other than the acquisition of
Conductus, Inc. in 2002, we have not made any such acquisitions
or investments to date and, therefore, our ability as an
organization to make acquisitions or investments is unproven. An
acquisition entails many risks, any of which could adversely
affect our business, including:
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failure to integrate operations, services and personnel;
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the price paid may exceed the value eventually realized;
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loss of share value to existing stockholders as a result of
issuing equity securities to finance an acquisition;
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•
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potential loss of key employees from either our then current
business or any acquired business;
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•
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entering into markets in which we have little or no prior
experience;
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•
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diversion of financial resources and management’s attention
from other business concerns;
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assumption of unanticipated liabilities related to the acquired
assets; and
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•
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the business or technologies acquired or invested in may have
limited operating histories and may be subjected to many of the
same risks to which we are exposed.
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In addition, future acquisitions may result in potentially
dilutive issuances of equity securities, or the incurrence of
debt, contingent liabilities or amortization expenses or charges
related to goodwill or other intangible assets, any of which
could harm our business. As a result, if we fail to properly
evaluate and execute acquisitions or investments, our business
and prospects may be seriously harmed.
If we
are unable to implement appropriate controls and procedures to
manage our potential growth, we may not be able to successfully
offer our products and implement our business
plan.
Our ability to successfully offer our products and implement our
business plan in a rapidly evolving market requires an effective
planning and management process. Growth in future operations
would place a significant strain on management systems and
resources. We expect that we would need to improve our financial
and managerial controls, reporting systems and procedures, and
would need to expand, train and manage our work force worldwide.
Furthermore, we expect that we would be required to manage
multiple relationships with various customers and other third
parties.
Compliance
with environmental regulations could be especially costly due to
the hazardous materials used in the manufacturing
process.
We are subject to a number of federal, state and local
governmental regulations related to the use, storage, discharge
and disposal of toxic, volatile or otherwise hazardous chemicals
used in our business. Any failure to comply with present or
future regulations could result in fines being imposed,
suspension of production or interruption of operations. In
addition, these regulations could restrict our ability to expand
or could require us to acquire costly equipment or incur other
significant expense to comply with environmental regulations or
to clean up prior discharges.
The
reliability of market data included in our public filings is
uncertain.
Since we operate in a rapidly changing market, we have in the
past, and may from time to time in the future, include market
data from industry publications and our own internal estimates
in some of the documents we file with the SEC. The reliability
of this data cannot be assured. Industry publications generally
state that the information contained in these publications has
been obtained from sources believed to be reliable, but that its
accuracy and completeness is not guaranteed. Although we believe
that the market data used in our filings with the SEC is and
will be reliable, it has not been independently verified.
Similarly, internal company estimates, while believed by us to
be reliable, have not been verified by any independent sources.
Our
international operations expose us to certain
risks.
In November 2007, we signed an agreement for a joint venture
with Hunchun BaoLi Communication Co. Ltd., or BAOLI, to
manufacture and market our
SuperLink®
interference elimination solution for the China market. In
addition to facing many of the risks faced by our domestic
business, if that joint venture or any other international
operation we may have is to be successful, we (together with any
joint venture partner) must recruit the necessary personnel and
develop the facilities needed to manufacture and sell the
products involved, learn about the local market (which may
significantly differ from our domestic market), build brand
awareness among potential customers and compete successfully
with local organizations with greater market knowledge and
potentially greater resources than we have. We must also obtain
a number of critical governmental approvals from both the United
States and the local country governments on a timely basis,
including those related to any transfers of our technology. We
must establish sufficient controls on any foreign operations to
ensure that those operations are operated in accordance with our
interests, that our intellectual property is protected and that
our involvement does not inadvertently create potential
competitors. There can be no assurance that these conditions
will be met. Even if
14
they are met, the process of building our international
operations could divert financial resources and management
attention from other business concerns. Finally, our
international operations will also be subject to the general
risks of international operations, such as:
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changes in exchange rates;
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international political and economic conditions;
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changes in government regulation in various countries;
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trade barriers;
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adverse tax consequences; and
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costs associated with expansion into new territories.
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Risks
Related to Our Common Stock and this Offering
Our
stock price is volatile.
The market price of our common stock has been, and we expect
will continue to be, subject to significant volatility. The
value of our common stock may decline regardless of our
operating performance or prospects. Factors affecting our market
price include:
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our perceived prospects;
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variations in our operating results and whether we have achieved
key business targets;
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changes in, or our failure to meet, earnings estimates;
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changes in securities analysts’ buy/sell recommendations;
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differences between our reported results and those expected by
investors and securities analysts;
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announcements of new contracts by us or our competitors;
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market reaction to any acquisitions, joint ventures or strategic
investments announced by us or our competitors; and
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general economic, political or stock market conditions.
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Recent events have caused stock prices for many companies,
including ours, to fluctuate in ways unrelated or
disproportionate to their operating performance. The general
economic, political and stock market conditions that may affect
the market price of our common stock are beyond our control. The
market price of our common stock at any particular time may not
remain the market price in the future.
We
have a significant number of outstanding warrants and options,
and future sales of these shares could adversely affect the
market price of our common stock.
As of June 28, 2010, we had outstanding warrants and
options exercisable for an aggregate of 1,499,082 shares of
common stock at a weighted average exercise price of $8.21 per
share. We have registered the issuance of all these shares, and
they will be freely tradable by the exercising party upon
issuance. The holders may sell these shares in the public
markets from time to time, without limitations on the timing,
amount or method of sale. As our stock price rises, the holders
may exercise their warrants and options and sell a large number
of shares. This could cause the market price of our common stock
to decline.
Our
corporate governance structure may prevent our acquisition by
another company at a premium over the public trading price of
our shares.
It is possible that the acquisition of a majority of our
outstanding voting stock by another company could result in our
stockholders receiving a premium over the public trading price
for our shares. Provisions of our restated certificate of
incorporation, as amended, or our certificate of incorporation,
and bylaws and of Delaware corporate
15
law could delay or make more difficult an acquisition of our
company by merger, tender offer or proxy contest, even if it
would create an immediate benefit to our stockholders. For
example, our certificate of incorporation does not permit
stockholders to act by written consent and our bylaws generally
require ninety days advance notice of any matters to be brought
before the stockholders at an annual or special meeting.
In addition, our board of directors has the authority to issue
up to 2,000,000 shares of preferred stock and to determine
the terms, rights and preferences of this preferred stock,
including voting rights of those shares, without any further
vote or action by the stockholders. At June 28, 2010,
1,388,477 shares of preferred stock remained unissued. See
the section entitled “Description of Capital Stock.”
The rights of the holders of common stock may be subordinate to,
and adversely affected by, the rights of holders of preferred
stock that may be issued in the future. The issuance of
preferred stock could also make it more difficult for a third
party to acquire a majority of our outstanding voting stock,
even at a premium over our public trading price.
Further, our certificate of incorporation also provides for a
classified board of directors with directors divided into three
classes serving staggered terms. These provisions may have the
effect of delaying or preventing a change in control of us
without action by our stockholders and, therefore, could
adversely affect the price of our stock or the possibility of
sale of shares to an acquiring person. See the section entitled
“Description of Capital Stock — Anti-Takeover
Effects of Certain Provisions of Delaware Law and Our Charter
Documents.”
We do
not anticipate declaring any cash dividends on our common
stock.
We have never declared or paid cash dividends on our common
stock and do not plan to pay any cash dividends in the near
future. Our current policy is to retain all funds and earnings
for use in the operation and expansion of our business. In
addition, our debt agreements prohibit the payment of cash
dividends or other distributions on any of our capital stock
except dividends payable in additional shares of capital stock.
Management
will have broad discretion as to the use of the proceeds from
this offering, and we may not use the proceeds
effectively.
We have not designated the amount of net proceeds from this
offering to be used for any particular purpose. Accordingly, our
management will have broad discretion as to the application of
the net proceeds from this offering and could use them for
purposes other than those contemplated at the time of this
offering. Our stockholders may not agree with the manner in
which our management chooses to allocate and spend the net
proceeds. Moreover, our management may use the net proceeds for
corporate purposes that may not increase our profitability or
market value.
You
will experience immediate dilution in the book value per share
of the common stock you purchase.
Because the price per share of our common stock being offered is
substantially higher than the book value per share of our common
stock, you will suffer substantial dilution in the net tangible
book value of the common stock you purchase in this offering.
Based on an assumed offering price to the public of
$ per share, if you purchase
shares of common stock in this offering, you will suffer
immediate and substantial dilution of
$ per share in the net tangible
book value of the common stock
at ,
2010. See the section entitled “Dilution” below for a
more detailed discussion of the dilution you will incur if you
purchase common stock in this offering.
A
large number of shares may be sold in the market following this
offering, which may depress the market price of our common
stock.
A large number of shares may be sold in the market following
this offering, which may depress the market price of our common
stock. Sales of a substantial number of shares of our common
stock in the public market following this offering could cause
the market price of our common stock to decline. If there are
more shares of common stock offered for sale than buyers are
willing to purchase, then the market price of our common stock
may decline to a market price at which buyers are willing to
purchase the offered shares.
Upon completion of this offering and assuming the sale of all
10,000,000 shares of our common stock offered pursuant to
this prospectus, we will have approximately
32,647,011 shares of our common stock outstanding and
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38,762,241 shares of common stock equivalents (including
shares of our Series A Preferred Stock that could be
converted into shares of our common stock).
In February 2008, we issued to BAOLI and two related purchasers
(collectively, BAOLI), a total of 3,101,361 shares of our
common stock and 611,523 shares of our Series A
Preferred Stock which could be converted (under certain
conditions) into an additional 6,115,230 shares of our
common stock. All of these shares are “restricted
securities” as defined under Rule 144 under the
Securities Act. Under Rule 144, subject to compliance with
certain conditions, BAOLI currently has the ability to sell up
to the greater of 1% of our outstanding stock or our average
weekly trading volume over a four calendar week period. During
2009, BAOLI sold 224,000 shares of our common stock
reducing its holdings from 3,101,361 to 2,877,361 shares.
We cannot predict the likelihood or timing of any future sales
by BAOLI or any of our other stockholders. Any sales by BAOLI or
any other stockholders could depress the market price of our
common stock.
USE OF
PROCEEDS
We expect to receive net proceeds from this offering of
approximately $ million (or
approximately $ million if
the underwriters exercise their over-allotment option in full),
after deduction of underwriting discounts and commissions and
estimated expenses payable by us, as described in the section
captioned “Underwriting” on page 23.
We currently intend to use the net proceeds of this offering for
working capital and general corporate purposes. General
corporate purposes may include repayment of debt and capital
expenditures. In addition, we may use a portion of any net
proceeds to acquire complementary products, technologies or
businesses. We will have significant discretion in the use of
any net proceeds. Investors will be relying on the judgment of
our management regarding the application of the proceeds of any
sale of our common stock securities. We may invest the net
proceeds temporarily until we use them for their stated purpose.
17
CAPITALIZATION
The following table sets forth our actual cash and cash
equivalents and capitalization, each as of April 3, 2010,
and as adjusted to give effect to the issuance of the common
stock offered hereby and the use of proceeds, as described in
the section entitled “Use of Proceeds.”
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As of April 3, 2010
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Actual
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As Adjusted(1)
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(Dollars in thousands,
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except per share data)
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Cash and cash equivalents
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$
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8,535
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$
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Total Liabilities
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$
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2,492
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$
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Total stockholders’ equity
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Preferred stock, authorized 2,000,000 shares,
$0.001 par value per share; Series A Preferred Stock
issued and outstanding 611,523
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$
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1
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$
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Common stock, authorized 250,000,000 shares,
$0.001 par value; issued and outstanding 22,404,513,
actual; issued and
outstanding shares,
as adjusted
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23
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Additional paid in capital
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241,543
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Retained earnings (accumulated deficit)
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(228,167
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)
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Accumulated other comprehensive income, net of tax
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—
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Total stockholders’ equity
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$
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13,400
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$
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Total Capitalization
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$
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15,892
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$
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(1) |
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Assumes that $ million of our
common stock is sold in this offering at
$ per share, our closing price
on ,
2010, and that the net proceeds thereof are approximately
$ million after deducting
underwriting discounts and commissions and our estimated
expenses. If the underwriters’ over-allotment option is
exercised in full, net proceeds will increase to
$ million. |
DILUTION
Our net tangible book value as of April 3, 2010 was
approximately $11.2 million, or $0.50 per share of our
common stock. Our net tangible book value per share represents
our total tangible assets less total liabilities divided by the
number of shares of our common stock outstanding on
April 3, 2010. Assuming that we issue all 10,000,000 of the
offered shares of our common stock at the public offering price
of $ per share, and after
deducting the commissions and estimated offering expenses
payable by us, our net tangible book value as of April 3,
2010 would have been approximately
$ million, or
$ per share of our common stock.
This amount represents an immediate increase in net tangible
book value of $ per share to our
existing stockholders and an immediate dilution in net tangible
book value of $ per share to new
investors purchasing shares of our common stock in this offering.
We determine dilution by subtracting the adjusted net tangible
book value per share after this offering from the public
offering price per share of our common stock. The following
table illustrates the dilution in net tangible book value per
share to new investors:
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|
|
|
|
|
|
|
|
Public offering price per share
|
|
|
|
|
|
$
|
|
|
Net tangible book value per share as of April 3, 2010
|
|
$
|
0.50
|
|
|
|
|
|
Increase per share attributable to new investors
|
|
$
|
|
|
|
|
|
|
Adjusted net tangible book value per share after this offering
|
|
|
|
|
|
$
|
|
|
Dilution in net tangible book value per share to new investors
|
|
|
|
|
|
$
|
|
|
18
As of April 3, 2010, the following shares were not included
in the above calculation:
|
|
|
|
•
|
6,115,230 shares of our common stock issuable upon
conversion of the 611,523 shares of outstanding
Series A Preferred Stock;
|
|
|
•
|
1,149,998 shares of our common stock issuable upon exercise of
stock options under our stock plans at a weighted average
exercise price of $7.97 per share;
|
|
|
•
|
618,237 shares of our common stock reserved for issuance under
various outstanding warrant agreements, at a weighted average
exercise price of $6.45 per share, which, as a result of
adjustment provisions under such warrant agreements, will
represent the right to
acquire
shares of our common stock at a weighted average exercise price
of $ immediately following the
closing of the offering;
|
|
|
•
|
1,850,468 shares of our common stock reserved for future
issuance under our 2003 Equity Incentive Plan.
|
Unless otherwise specifically stated, information throughout
this prospectus assumes that none of our outstanding options or
warrants to purchase shares of our common stock are exercised.
PRICE
RANGE OF COMMON STOCK
Our common stock is listed and traded on the NASDAQ Capital
Market under the symbol “SCON.” The following table
sets forth, for the quarters shown, the range of high and low
sales prices of our common stock on the NASDAQ Capital Market.
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Quarter Ended
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High
|
|
Low
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
July 3, 2010 (through June 28, 2010)
|
|
$
|
3.00
|
|
|
$
|
2.26
|
|
|
|
|
|
April 3
|
|
$
|
3.85
|
|
|
$
|
2.35
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31
|
|
$
|
3.35
|
|
|
$
|
2.08
|
|
|
|
|
|
September 26
|
|
$
|
3.99
|
|
|
$
|
2.22
|
|
|
|
|
|
June 27
|
|
$
|
5.45
|
|
|
$
|
0.93
|
|
|
|
|
|
March 28
|
|
$
|
1.45
|
|
|
$
|
0.82
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31
|
|
$
|
1.50
|
|
|
$
|
0.68
|
|
|
|
|
|
September 27
|
|
$
|
2.43
|
|
|
$
|
0.73
|
|
|
|
|
|
June 28
|
|
$
|
4.83
|
|
|
$
|
2.18
|
|
|
|
|
|
March 29
|
|
$
|
6.80
|
|
|
$
|
3.22
|
|
|
|
|
|
As of June 28, 2010, we had approximately
22,647,011 shares of common stock outstanding, held of
record by approximately 166 stockholders. The last reported
sales price of our common stock on the NASDAQ Capital Market on
June 28, 2010 was $2.35 per share.
DIVIDEND
POLICY
We have never paid cash dividends and intend to employ all
available funds in the development of our business. We have no
plans to pay cash dividends in the near future, and our line of
credit does not allow the payment of dividends.
Our ability to declare or pay dividends on shares of our common
stock is subject to the requirement that we pay an equivalent
dividend on each outstanding share of Series A Preferred
Stock (on an as-converted basis).
19
DESCRIPTION
OF CAPITAL STOCK
The following is a brief description of our capital stock. This
summary does not purport to be complete in all respects. This
description is subject to and qualified entirely by the terms of
our restated certificate of incorporation, as amended, or our
certificate of incorporation, and our restated bylaws, or our
bylaws, copies of which have been filed with the SEC and are
also available upon request from us, and by the General
Corporation Law of the State of Delaware.
Authorized
Capitalization
We have 252,000,000 shares of capital stock authorized
under our certificate of incorporation, consisting of
250,000,000 shares of common stock and
2,000,000 shares of preferred stock, of which 706,829 have
been designated as Series A Convertible Preferred Stock,
par value $0.001 per share, or Series A Preferred Stock. As
of June 28, 2010, we had 22,647,011 shares of common
stock and 611,523 shares of Series A Preferred Stock
outstanding. Our authorized shares of common stock and preferred
stock are available for issuance without further action by our
stockholders, unless such action is required by applicable law
or the rules of any stock exchange or automated quotation system
on which our securities may be listed or traded. If the approval
of our stockholders is not so required, our board of directors
may determine not to seek stockholder approval.
Common
Stock
Holders of our common stock are entitled to such dividends as
may be declared by our board of directors out of funds legally
available for such purpose, subject to any preferential dividend
rights of any then outstanding preferred stock. The shares of
common stock are neither redeemable or convertible. Holders of
common stock have no preemptive or subscription rights to
purchase any of our securities.
Each holder of our common stock is entitled to one vote for each
such share outstanding in the holder’s name. No holder of
common stock is entitled to cumulate votes in voting for
directors.
In the event of our liquidation, dissolution or winding up, the
holders of our common stock are entitled to receive pro rata our
assets which are legally available for distribution, after
payments of all debts and other liabilities and subject to the
prior rights of any holders of preferred stock then outstanding.
All of the outstanding shares of our common stock are fully paid
and non-assessable. The shares of common stock offered by this
prospectus will also be fully paid and non-assessable.
Our common stock is listed on the NASDAQ Capital Stock Market
under the symbol “SCON.” The transfer agent and
registrar for our common stock is Registrar & Transfer
Company. Its address is 10 Commerce Drive, Cranford, NJ 07016,
and its telephone number is
(800) 866-1340.
Preferred
Stock
Our certificate of incorporation permits us to issue up to
2,000,000 shares of preferred stock in one or more series
and with rights and preferences that may be fixed or designated
by our board of directors without any further action by our
stockholders. We currently have 706,829 shares of preferred
stock designated as Series A Convertible Preferred Stock,
of which, as of June 28, 2010, 611,523 shares were
outstanding.
Subject to the limitations prescribed in our certificate of
incorporation and under Delaware law, our certificate of
incorporation authorizes the board of directors, from time to
time by resolution and without further stockholder action, to
provide for the issuance of shares of preferred stock, in one or
more series, and to fix the designation, powers, preferences and
other rights of the shares and to fix the qualifications,
limitations and restrictions thereof. The issuance of preferred
stock could adversely affect the rights of holders of our common
stock, including with respect to voting, dividends and
liquidation and, by issuing shares of preferred stock with
certain voting, conversion
and/or
redemption rights. Such issuance of preferred stock may have the
effect of delaying, deferring or preventing a change of control.
Preferred stock could thus be issued quickly with terms
calculated to delay or prevent a change in control of us or to
make removal of management more difficult. Additionally, the
issuance of preferred stock may decrease the market price of our
common stock.
20
The number of authorized shares of preferred stock may be
increased or decreased, but not decreased below the number of
shares then outstanding, by the affirmative vote of the holders
of a majority of our common stock without a vote of the holders
of preferred stock, or any series of preferred stock, unless a
vote of any such holder is required pursuant to the terms of
such series of preferred stock.
Series A
Convertible Preferred Stock
In October 2007, in connection with entering into an amended
investment agreement with BAOLI, our board of directors
authorized the designation and issuance of 706,829 shares
of Series A Preferred Stock. The terms of the investment
agreement were subsequently amended and, in February 2008, we
issued to BAOLI and two related purchasers (collectively,
BAOLI), a total of 3,101,361 shares of our common stock and
611,523 shares of our Series A Preferred Stock
(convertible under certain conditions into 6,115,230 shares
of our common stock).
Subject to the terms and conditions of our Series A
Preferred Stock and to customary adjustments to the conversion
rate, each share of our Series A Preferred Stock is
convertible into ten shares of our common stock so long as the
number of shares of our common stock beneficially owned by BAOLI
following such conversion does not exceed 9.9% of our
outstanding common stock. Except for a preference on liquidation
of $0.01 per share, each share of Series A Preferred Stock
is the economic equivalent of the ten shares of common stock
into which it is convertible. Except as required by law, the
Series A Preferred Stock will not have any voting rights.
For a complete description of the terms of the Series A
Preferred Stock, please see the certificate of designations, a
copy of which is available from us or in the
Form 8-K/A
we filed with the SEC on February 25, 2008, which may be
viewed on the website maintained by the SEC (www.sec.gov) and
which is incorporated by reference into this prospectus.
Anti-Takeover
Effects of Certain Provisions of Delaware Law and Our Charter
Documents
The following is a summary of certain provisions of Delaware
law, our certificate of incorporation and our bylaws. This
summary does not purport to be complete and is qualified in its
entirety by reference to the corporate law of Delaware and our
certificate of incorporation and bylaws.
Effect of Delaware Anti-Takeover Statute. We
are subject to Section 203 of the Delaware General
Corporation Law, an anti-takeover law. In general,
Section 203 prohibits a Delaware corporation from engaging
in any business combination with any interested stockholder for
a period of three years following the date that the stockholder
became an interested stockholder, unless:
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|
|
|
•
|
prior to that date, the board of directors of the corporation
approved either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder;
|
|
|
•
|
upon consummation of the transaction that 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 of
voting stock outstanding (but not the voting stock owned by the
interested stockholder) those shares owned by persons who are
directors and officers and by excluding employee stock plans in
which employee participants do not have the right to determine
whether shares held subject to the plan will be tendered in a
tender or exchange offer; or
|
|
|
•
|
on or subsequent to that date, the business combination is
approved by the board of directors of the corporation and
authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least
662/3%
of the outstanding voting stock that is not owned by the
interested stockholder.
|
Section 203 defines “business combination” to
include the following:
|
|
|
|
•
|
any merger or consolidation involving the corporation and the
interested stockholder;
|
|
|
•
|
any sale, transfer, pledge or other disposition of 10% or more
of the assets of the corporation involving the interested
stockholder;
|
21
|
|
|
|
•
|
subject to certain exceptions, any transaction that results in
the issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder;
|
|
|
•
|
any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested
stockholder; or
|
|
|
•
|
the receipt by the interested stockholder of the benefit of any
loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation.
|
In general, Section 203 defines an interested stockholder
as any entity or person beneficially owning 15% or more of the
outstanding voting stock of the corporation, or who beneficially
owns 15% or more of the outstanding voting stock of the
corporation at anytime within a three-year period immediately
prior to the date of determining whether such person is an
interested stockholder, and any entity or person affiliated with
or controlling or controlled by any of these entities or persons.
Our Charter Documents. Our charter documents
include provisions that may have the effect of discouraging,
delaying or preventing a change in control or an unsolicited
acquisition proposal that a stockholder might consider
favorable, including a proposal that might result in the payment
of a premium over the market price for the shares held by our
stockholders. Certain of these provisions are summarized in the
following paragraphs.
Classified Board of Directors. Pursuant to our
certificate of incorporation, the number of directors is fixed
by our board of directors. Our directors are divided into three
classes, each class to serve a three-year term and to consist as
nearly as possible of one-third of the total number of
directors. Pursuant to our bylaws, directors elected by
stockholders at an annual meeting of stockholders will be
elected by a plurality of all votes cast.
No Stockholder Action by Written Consent. Our
bylaws provide that a special meeting of stockholders may be
called only by the chairman of the board, a majority of the
entire board of directors or the president. Stockholders are not
permitted to call, or to require that the board of directors
call, a special meeting of stockholders. Moreover, the business
permitted to be conducted at any special meeting of stockholders
is limited to the business brought before the meeting pursuant
to the notice of the meeting given. In addition, our certificate
of incorporation provides that any action taken by our
stockholders must be effected at an annual or special meeting of
stockholders and may not be taken by written consent instead of
a meeting. Our bylaws establish an advance notice procedure for
stockholders to nominate candidates for election as directors or
to bring other business before meetings of our stockholders.
Change in Control Agreements. A number of our
executives have agreements with us that entitle them to payments
in certain circumstances following a change in control.
22
UNDERWRITING
In accordance with the terms and conditions contained in the
underwriting agreement, we have agreed to sell to each of the
underwriters named below for which MDB Capital Group LLC is
acting as the representative, severally, and not jointly, and
each has agreed to purchase from us on a firm commitment basis,
the number of the shares of our common stock offered in this
offering set forth opposite their respective names below:
|
|
|
|
|
Underwriters
|
|
Number of Shares
|
|
MDB Capital Group LLC
|
|
|
|
|
Feltl and Company
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
A copy of the underwriting agreement has been filed as an
exhibit to the registration statement of which this prospectus
forms a part.
We have been advised by the representative of the underwriters
that the underwriters propose to offer shares of our common
stock directly to the public at the public offering prices set
forth on the cover page of this prospectus. Any securities sold
by the underwriters to securities dealers will be sold at the
public offering prices less a selling concession not in excess
of $ per share.
The underwriting agreement provides that the underwriters’
obligations to purchase shares of our common stock are subject
to conditions contained in the underwriting agreement. The
underwriters are obligated to purchase and pay for all of the
common stock offered by this prospectus, other than those
covered by the over-allotment option, unless those securities
are purchased.
None of our securities included in this offering may be offered
or sold, directly or indirectly, nor may this prospectus and any
other offering material or advertisements in connection with the
offer and sales of any of our common stock be distributed or
published in any jurisdiction, except under circumstances that
will result in compliance with the applicable rules and
regulations of that jurisdiction. Persons who receive this
prospectus are advised to inform themselves about and to observe
any restrictions relating to this offering of our common stock
and the distribution of this prospectus. This prospectus is
neither an offer to sell nor a solicitation of any offer to buy
any of our common stock included in this offering in any
jurisdiction where that would not be permitted or legal.
The underwriters have advised us that they do not intend to
confirm sales to any accounts over which they exercise
discretionary authority.
Underwriting
discount and expenses
The following table summarizes the underwriting discount to be
paid to the underwriters by us.
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
With
|
|
|
Over-Allotment
|
|
Over-Allotment
|
|
Underwriting discount to be paid to the underwriters by us for
the common stock
|
|
$
|
|
|
|
$
|
|
|
We estimate the expenses payable by us for this offering to be
$ , including the underwriting
discount, or $ if the
underwriters’ over-allotment option is exercised in full.
Over-allotment
option
We have granted to the underwriters an option, exercisable not
later than 45 days after the date of this prospectus, to
purchase up to an additional 1,500,000 shares of our common
stock at the public offering price, less the underwriting
discount, set forth on the cover page of this prospectus. The
representative may exercise the option solely to cover
over-allotments, if any, made in connection with this offering.
If any additional shares of our common stock are purchased
pursuant to the over-allotment option, the underwriters will
offer these additional shares of our common stock on the same
terms as those on which the other shares of common stock are
being offered hereby.
Determination
of offering price
The public offering price of the common stock was negotiated
between us and the representative of the underwriters, based on
the trading price of the common stock prior to the offering,
among other things. Other factors
23
considered in determining the price of the common stock include
the history and prospects of the company, the stage of
development of our business, our business plans for the future
and the extent to which they have been implemented, an
assessment of our management, general conditions of the
financial markets at the time of the offering and such other
factors as were deemed relevant.
Lock-Up
Agreements
We will agree, for a period of 180 days from the date of
this prospectus, subject to certain exceptions, not, to offer,
sell, contract to sell, pledge or otherwise dispose of, enter
into any transaction which is designed to, or might reasonably
be expected to, result in the disposition of (whether by actual
disposition or effective economic disposition due to cash
settlement or otherwise) or file (or participate in the filing
of) a registration statement with the SEC, in respect of, any
shares of capital stock of the Company or any securities
convertible into, or exercisable or exchangeable for such
capital stock, for the Company’s account, without the prior
written consent of MDB Capital Group LLC. Certain of our
executive officers and directors will agree to substantially
similar terms for a period of 180 days pursuant to
individual
lock-up
agreements. The foregoing restrictions on sales will not apply
to our ability to sell securities to the underwriter pursuant to
the underwriting agreement. In addition, the foregoing
restrictions will not apply to our ability to issue our common
stock pursuant to our existing stock option and employee stock
purchase plans or under outstanding securities convertible into
or exercisable for common stock.
Indemnification
We will agree to indemnify the underwriter against certain
liabilities, including liabilities under the Securities Act, and
to contribute to payments that the underwriters may be required
to make for these liabilities.
Stabilization,
Short Positions and Penalty Bids
The underwriters may engage in over-allotment, stabilizing
transactions, syndicate covering transactions, and penalty bids
or purchases for the purpose of pegging, fixing or maintaining
the price of the common stock, in accordance with
Regulation M under the Exchange Act:
|
|
|
|
•
|
Over-allotment involves sales by the underwriter of shares in
excess of the number of shares the underwriter is obligated to
purchase, which creates a syndicate short position. The short
position may be either a covered short position or a naked short
position. In a covered short position, the number of shares
over-allotted by an underwriter is not greater than the number
of shares that it may purchase in the over-allotment option. In
a naked short position, the number of shares involved is greater
than the number of shares in the over-allotment option. The
underwriter may close out any short position by either
exercising its over-allotment option
and/or
purchasing shares in the open market.
|
|
|
•
|
Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a
specified maximum.
|
|
|
•
|
Syndicate covering transactions involve purchases of the common
stock in the open market after the distribution has been
completed in order to cover syndicate short positions. In
determining the source of shares to close out the short
position, the underwriter will consider, among other things, the
price of shares available for purchase in the open market as
compared to the price at which it may purchase shares through
the over-allotment option. If an underwriter sells more shares
than could be covered by the over-allotment option, a naked
short position, the position can only be closed out by buying
shares in the open market. A naked short position is more likely
to be created if an underwriter is concerned that there could be
downward pressure on the price of the shares in the open market
after pricing that could adversely affect investors who purchase
in the offering.
|
|
|
•
|
Penalty bids permit an underwriter to reclaim a selling
concession from a syndicate member when the shares originally
sold by the syndicate member are purchased in a stabilizing or
syndicate covering transaction to cover syndicate short
positions.
|
These stabilizing transactions, syndicate covering transactions
and penalty bids may have the effect of raising or maintaining
the market price of our common stock or preventing or retarding
a decline in the market price of the
24
common stock. As a result, the price of the common stock may be
higher than the price that might otherwise exist in the open
market. These transactions may be effected on the NASDAQ Capital
Market, in the case of the common stock or otherwise and, if
commenced, may be discontinued at any time.
Neither we nor the underwriters make any representation or
prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the
common stock. In addition, neither we nor the underwriters make
any representation that the underwriters will engage in these
stabilizing transactions or that any transaction, once
commenced, will not be discontinued without notice.
Passive
Market Making
In connection with the offering, the underwriters may engage in
passive market making transactions in the common stock on the
NASDAQ Capital Market in accordance with Rule 103 of
Regulation M under the Exchange Act during the period
before the commencement of offers or sales of common stock and
extending through the completion of distribution. A passive
market maker must display its bids at a price not in excess of
the highest independent bid of the security. However, if all
independent bids are lowered below the passive market
maker’s bid, that bid must be lowered when specified
purchase limits are exceeded.
Electronic
Distribution
A prospectus in electronic format may be made available on the
Internet sites or through other online services maintained by
the underwriters participating in this offering, or by their
affiliates. In those cases, prospective investors may view
offering terms online and, depending upon the underwriter,
prospective investors may be allowed to place orders online. The
underwriters may agree with us to allocate a specific number of
shares for sale to online brokerage account holders. Any such
allocation for online distributions will be made by the
underwriters on the same basis as other allocations.
Other than the prospectus in electronic format, the information
on an underwriter’s website and any information contained
in any other website maintained by the underwriter is not part
of the prospectus or the registration statement of which this
prospectus forms a part, has not been approved
and/or
endorsed by us or any underwriter in its capacity as underwriter
and should not be relied upon by investors.
The underwriter’s compensation in connection with this
offering is limited to the fees and expenses described above
under “Commissions and Expenses.”
We have no other arrangements with any of the underwriters
following completion of this offering. The underwriters may,
however, from time to time, engage in transactions with or
perform services for us in the ordinary course of its business.
LEGAL
MATTERS
The validity of the shares of common stock offered by this
prospectus will be passed upon for us by Manatt,
Phelps & Phillips, LLP, Los Angeles, California.
Certain legal matters will be passed upon for the underwriters
by TroyGould PC, Los Angeles, California.
EXPERTS
The consolidated financial statements of Superconductor
Technologies Inc., as of December 31, 2009 and 2008, and
for each of the three years in the period ended
December 31, 2009, incorporated in this prospectus by
reference to the Annual Report on
Form 10-K
of Superconductor Technologies Inc. for the year ended
December 31, 2009 have been so incorporated in reliance on
the report (which contains an explanatory paragraph related to
the Company’s ability to continue as a going concern) of
Stonefield Josephson Inc., independent registered public
accounting firm, given on the authority of said firm as experts
in auditing and accounting.
25
10,000,000 Shares
Superconductor Technologies
Inc.
Common Stock
MDB Capital Group LLC
Feltl and Company
,
2010
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
|
|
ITEM 13.
|
OTHER
EXPENSES OF ISSUANCE AND DISTRIBUTION
|
The following table sets forth the various expenses to be
incurred in connection with the sale and distribution of our
common stock being registered hereby, all of which will be borne
by us (except any underwriting discounts and commissions and
expenses incurred for brokerage, accounting, tax or legal
services or any other expenses incurred in disposing of the
shares). All amounts shown are estimates except the SEC
registration fee and the FINRA filing fee.
|
|
|
|
|
SEC registration fee
|
|
$
|
1,960
|
|
FINRA filing fee
|
|
|
3,249
|
|
Printing and engraving expenses
|
|
|
20,000
|
|
Legal fees and expenses
|
|
|
160,000
|
|
Accounting fees and expenses
|
|
|
15,000
|
|
Transfer Agent Fees
|
|
|
1,000
|
|
Miscellaneous fees and expenses
|
|
|
35,000
|
|
|
|
|
|
|
Total
|
|
$
|
236,209
|
|
|
|
|
|
|
|
|
ITEM 14.
|
INDEMNIFICATION
OF DIRECTORS AND OFFICERS
|
Section 145 of the Delaware Law General Corporation, or 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 of the Delaware Law, 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 Company may from time to time be subject to
Section 2115 of the California Corporations Code, or the
California Code, according to which Section 317 of the
California Code applies to the indemnification of officers and
directors of the Company. 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, stockholders vote,
agreement or otherwise. The limitation of liability contained in
our certificate of incorporation and the indemnification
provision included in our bylaws are consistent with the
Delaware Law Sections 102(b)(7) and 145, and California Code
Section 317. The Company has purchased directors and
officers liability insurance.
II-1
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, as amended. The
Company’s certificate of incorporation, as amended, and the
Company’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 Company
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 Company pursuant to such
provisions, the Company has been informed that in the opinion of
the SEC such indemnification is against public policy as
expressed in such Act and is therefore unenforceable.
|
|
ITEM 15.
|
RECENT
SALES OF UNREGISTERED SECURITIES
|
On February 27, 2008 we issued to Hunchun BaoLi
Communication Co. Ltd. and two related purchasers (collectively,
BAOLI) a total of (i) 3,101,361 shares of our common
stock (of which 953,065 must be voted in accordance with the
votes of our other shares, effectively giving the holder no
voting power over such shares) and (ii) 611,523 shares
of our Series A Convertible Preferred Stock (convertible
under certain conditions into 6,115,230 shares of our
common stock), for an aggregate purchase price of
$15.0 million in cash. Subject to the terms and conditions
of our Series A Preferred Stock and to customary
adjustments to the conversion rate, each share of our
Series A Preferred Stock is convertible into ten shares of
our common stock so long as the number of shares of our common
stock beneficially owned by BAOLI following such conversion does
not exceed 9.9% of our outstanding common stock. These
securities were sold in a private placement that was not
registered under the Securities Act of 1933 in reliance on the
exemption from registration provided by Section 4(2) of
such Act and Rule 506 promulgated thereunder. The bases for
claiming such exemptions include, among other factors,
BAOLI’s representations to us as to their status as
“accredited investors.”
|
|
|
|
|
EXHIBIT
|
|
|
NUMBER
|
|
DESCRIPTION OF DOCUMENT
|
|
|
1
|
.1
|
|
Form of Underwriting Agreement*
|
|
3
|
.1
|
|
Restated Certificate of Incorporation of Registrant as amended
through March 1, 2006.(25)
|
|
3
|
.2
|
|
Amended and Restated Bylaws of Registrant.(25)
|
|
4
|
.1
|
|
Form of Common Stock Certificate.(24)
|
|
4
|
.2
|
|
Certificate of Designations of Registrant of Series A
Convertible Preferred Stock of Registrant filed
November 13, 2007.(23)
|
|
4
|
.3
|
|
Warrant to Purchase Stock issued by Registrant to Silicon Valley
Bank and Registration Rights Agreement.(10)
|
|
4
|
.4
|
|
Form of Warrant Agreement dated August, 2005.(17)
|
|
5
|
.1
|
|
Opinion of Manatt, Phelps & Phillips, LLP regarding
the validity of the common stock being
registered.v
|
|
10
|
.1
|
|
1992 Director Option Plan (as amended through January
1997).(1)***
|
|
10
|
.2
|
|
Form of 1992 Director Stock Option Agreement.(1)***
|
|
10
|
.3
|
|
Amended and Restated 1998 Non-Statutory Stock Option Plan,
including Form of Stock Option Agreement.(4)***
|
|
10
|
.4
|
|
1999 Stock Plan.(2)***
|
|
10
|
.5
|
|
Form of 1999 Stock Plan Stock Option Agreement.(2)***
|
|
10
|
.6
|
|
Form of Change in Control Agreement dated March 28,
2003.(7)***
|
|
10
|
.7
|
|
Form of Amendment No. 1 to Change in Control Agreement
dated as of May 24, 2005.(18)***
|
|
10
|
.8
|
|
Form of Amendment No. 2 to Change in Control Agreement
dated as of December 31, 2006.(20)***
|
II-2
|
|
|
|
|
EXHIBIT
|
|
|
NUMBER
|
|
DESCRIPTION OF DOCUMENT
|
|
|
10
|
.9
|
|
Accounts Receivable Purchase Agreement by and between Registrant
and Silicon Valley Bank, dated March 28, 2003, effective
date June 23, 2003.(7)
|
|
10
|
.10
|
|
Accounts Receivable Purchase Modification Agreement by and
between Registrant and Silicon Valley Bank dated March 17,
2004.(9)
|
|
10
|
.11
|
|
Amendment to Purchase Agreement by and between Registrant and
Silicon Valley Bank dated as of April 28, 2004.(11)
|
|
10
|
.12
|
|
Accounts Receivable Purchase Modification Agreement by and
between Registrant and Silicon Valley Bank dated March 16,
2005.(15)
|
|
10
|
.13
|
|
Third Amendment to Loan and Security Agreement by and between
Registrant and Silicon Valley Bank dated June 16, 2006.(25)
|
|
10
|
.14
|
|
Fourth Amendment to Loan and Security Agreement by and between
Registrant and Silicon Valley Bank dated June 18, 2007.(25)
|
|
10
|
.15
|
|
Sixth Amendment to Loan and Security Agreement by and between
Registrant and Silicon Valley Bank dated July 31, 2008.(24)
|
|
10
|
.16
|
|
Seventh Amendment to Loan and Security Agreement by and between
Registrant and Silicon Valley Bank dated July 31, 2009.(25)
|
|
10
|
.17
|
|
Patent License Agreement by and between Registrant and Lucent
Technologies GRL LLC.(8)**
|
|
10
|
.18
|
|
License Agreement between Registrant and Sunpower dated
May 2, 1995.(12)**
|
|
10
|
.19
|
|
Employment Agreement between Registrant and Jeffrey Quiram dated
as of February 14, 2005.(13)***
|
|
10
|
.20
|
|
Stock Option Grant and 2003 Equity Incentive Plan Option
Agreement between Registrant and Jeffrey Quiram dated
February 14, 2005.(13)***
|
|
10
|
.21
|
|
Amendment to Employment Agreement between Registrant and Jeffrey
Quiram dated as of December 31, 2006.(20)***
|
|
10
|
.22
|
|
2003 Equity Incentive Plan As Amended May 25, 2005.(16)***
|
|
10
|
.23
|
|
Form of Notice of Grant of Stock Options and Option Agreement
for 2003 Equity Incentive Plan.(13)***
|
|
10
|
.24
|
|
Management Incentive Plan (July 24, 2006).(19)***
|
|
10
|
.25
|
|
Employment Agreement between Registrant and Terry White dated as
of April 11, 2005.(14)***
|
|
10
|
.26
|
|
Amendment to Employment Agreement between Registrant and Terry
White dated as of December 31, 2006.(20)***
|
|
10
|
.27
|
|
Form of Director and Officer Indemnification Agreement.(18)***
|
|
10
|
.28
|
|
Lease Agreement between the Registrant and 1200 Enterprises LLC
dated as of June 1, 2001.(6)
|
|
10
|
.29
|
|
Second Amendment to Lease Agreement between the Registrant and
1200 Enterprises LLC dated January 19, 2009.(25)
|
|
10
|
.30
|
|
Agreement between Registrant and Hunchun BaoLi Communication
Co., Ltd. (“BAOLI”) dated August 17, 2007.(21)
|
|
10
|
.31
|
|
First Amendment to Agreement between Registrant and BAOLI dated
November 1, 2007(22)
|
|
10
|
.32
|
|
Second Amendment to Agreement between Registrant and BAOLI dated
January 7, 2008.(22)
|
|
10
|
.33
|
|
Framework Agreement between Registrant and BAOLI dated
November 8, 2007.(22)
|
|
10
|
.34
|
|
Sino-Foreign Equity Joint Venture Contract between
Superconductor Investments (Mauritius) Limited and BAOLI dated
December 8, 2007 (Exhibit A to Framework Agreement
with BAOLI).(22)
|
|
10
|
.35
|
|
Form of Technology and Trademark License Agreement between
Superconductor Investments (Mauritius) Limited, Registrant and
BAOLI (Exhibit B to Framework Agreement).(22)
|
|
21
|
|
|
List of Subsidiaries.(25)
|
|
23
|
.1
|
|
Consent of Stonefield Josephson Inc, Independent Registered
Public Accounting
Firm.v
|
|
23
|
.2
|
|
Consent of Manatt, Phelps & Phillips, LLP (included in
Exhibit 5.1 filed herewith).
|
|
24
|
.1
|
|
Powers of Attorney (included in the signature pages to the
Registration Statement)
|
II-3
|
|
|
(1) |
|
Incorporated by reference from Registrant’s Registration
Statement on
Form S-8
filed April 15, 1998 (File
No. 333-50137). |
|
(2) |
|
Incorporated by reference from Registrant’s Registration
Statement on
Form S-8
filed November 4, 1999 (File
No. 333-90293). |
|
(3) |
|
[Reserved]. |
|
(4) |
|
Incorporated by reference from Registrant’s Registration
Statement on
Form S-8
filed March 6, 2001 (File
No. 333-56606). |
|
(5) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2001. |
|
(6) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended March 30, 2002. |
|
(7) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended March 29, 2003. |
|
(8) |
|
Incorporated by reference from Registrant’s Annual Report
on
Form 10-K
for the year ended December 31, 2003, filed March 11,
2004. |
|
(9) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended April 3, 2004, filed May 12,
2004. |
|
(10) |
|
Incorporated by reference from Registrant’s Registration
Statement on
Form S-3
(File
No. 333-117107),
filed July 2, 2004. |
|
(11) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended July 3, 2004, filed August 11,
2004. |
|
(12) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended October 2, 2004, filed
November 10, 2004. |
|
(13) |
|
Incorporated by reference from Registrant’s Annual Report
on
Form 10-K
for the year ended December 31, 2004. |
|
(14) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended April 2, 2005. |
|
(15) |
|
Incorporated by reference from Registrants’ Current Report
on
Form 8-K
filed April 4, 2005. |
|
(16) |
|
Incorporated by reference from Registrant’s Current Report
on
Form 8-K
filed May 27, 2005. |
|
(17) |
|
Incorporated by reference from Registrant’s Current Report
on
Form 8-K
filed August 11, 2005. |
|
(18) |
|
Incorporated by reference from Registrant’s Annual Report
on
Form 10-K
for the year ended December 31, 2005. |
|
(19) |
|
Incorporated by reference from Registrant’s Current Report
on
Form 8-K
filed July 28, 2006. |
|
(20) |
|
Incorporated by reference from Registrant’s Annual Report
on
Form 10-K
for the year ended December 31, 2006. |
|
(21) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended September 29, 2007. |
|
(22) |
|
Incorporated by reference from Registrant’s Annual Report
on
Form 10-K
for the year ended December 31, 2007. |
|
(23) |
|
Incorporated by reference from Registrant’s Current Report
on
Form 8-K/A
filed February 25, 2008. |
|
(24) |
|
Incorporated by reference from Registrant’s Annual Report
on
Form 10-K
for the year ended December 31, 2008. |
|
(25) |
|
Incorporated by reference from Registrant’s Annual Report
on
Form 10-K
for the year ended December 31, 2009. |
|
v |
|
Filed herewith. |
|
* |
|
To be filed by amendment. |
II-4
|
|
|
** |
|
Confidential treatment has been previously granted for certain
portions of these exhibits. |
|
*** |
|
This exhibit is a management contract or compensatory plan or
arrangement. |
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the indemnification provisions described herein, 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 of 1933
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 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 of 1933, the information omitted from the form of
prospectus as 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 of 1933 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 of 1933, 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-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds
to believe that the registrant meets all of the requirements for
filing on
Form S-1
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
2nd day of July, 2010.
SUPERCONDUCTOR TECHNOLOGIES INC.
|
|
|
|
By:
|
/s/ Jeffrey
A. Quiram
|
Jeffrey A. Quiram
President and Chief Executive Officer
POWER OF
ATTORNEY
KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Jeffrey A.
Quiram and William J. Buchanan, and each of them, his or her
true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign
any and all amendments (including post-effective amendments) to
this registration statement (and to any registration statement
filed pursuant to Rule 462 under the Securities Act of
1933), and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the
following persons in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Jeffrey
A. Quiram
Jeffrey
A. Quiram
|
|
President, Chief Executive Officer and Director (Principal
Executive Officer)
|
|
July 2, 2010
|
|
|
|
|
|
/s/ William
J. Buchanan
William
J. Buchanan
|
|
Chief Financial Officer
(Principal Accounting Officer)
(Principal Financial Officer)
|
|
July 2, 2010
|
|
|
|
|
|
/s/ David
W. Vellequette
David
W. Vellequette
|
|
Director
|
|
July 2, 2010
|
|
|
|
|
|
/s/ Lynn
J. Davis
Lynn
J. Davis
|
|
Director
|
|
July 2, 2010
|
|
|
|
|
|
/s/ Dennis
J. Horowitz
Dennis
J. Horowitz
|
|
Director
|
|
July 2, 2010
|
|
|
|
|
|
/s/ Martin
A. Kaplan
Martin
A. Kaplan
|
|
Director
|
|
July 2, 2010
|
|
|
|
|
|
/s/ John
D. Lockton
John
D. Lockton
|
|
Chairman of the Board of Directors
|
|
July 2, 2010
|
II-6
EXHIBIT INDEX
|
|
|
|
|
EXHIBIT
|
|
|
NUMBER
|
|
DESCRIPTION OF DOCUMENT
|
|
|
1
|
.1
|
|
Form of Underwriting Agreement*
|
|
3
|
.1
|
|
Restated Certificate of Incorporation of Registrant as amended
through March 1, 2006.(25)
|
|
3
|
.2
|
|
Amended and Restated Bylaws of Registrant.(25)
|
|
4
|
.1
|
|
Form of Common Stock Certificate.(24)
|
|
4
|
.2
|
|
Certificate of Designations of Registrant of Series A
Convertible Preferred Stock of Registrant filed November 13,
2007.(23)
|
|
4
|
.3
|
|
Warrant to Purchase Stock issued by Registrant to Silicon Valley
Bank and Registration Rights Agreement.(10)
|
|
4
|
.4
|
|
Form of Warrant Agreement dated August, 2005.(17)
|
|
5
|
.1
|
|
Opinion of Manatt, Phelps & Phillips, LLP regarding the
validity of the common stock being
registered.v
|
|
10
|
.1
|
|
1992 Director Option Plan (as amended through January
1997).(1)***
|
|
10
|
.2
|
|
Form of 1992 Director Stock Option Agreement.(1)***
|
|
10
|
.3
|
|
Amended and Restated 1998 Non-Statutory Stock Option Plan,
including Form of Stock Option Agreement.(4)***
|
|
10
|
.4
|
|
1999 Stock Plan.(2)***
|
|
10
|
.5
|
|
Form of 1999 Stock Plan Stock Option Agreement.(2)***
|
|
10
|
.6
|
|
Form of Change in Control Agreement dated March 28, 2003.(7)***
|
|
10
|
.7
|
|
Form of Amendment No. 1 to Change in Control Agreement dated as
of May 24, 2005.(18)***
|
|
10
|
.8
|
|
Form of Amendment No. 2 to Change in Control Agreement dated as
of December 31, 2006.(20)***
|
|
10
|
.9
|
|
Accounts Receivable Purchase Agreement by and between Registrant
and Silicon Valley Bank, dated March 28, 2003, effective date
June 23, 2003.(7)
|
|
10
|
.10
|
|
Accounts Receivable Purchase Modification Agreement by and
between Registrant and Silicon Valley Bank dated March 17,
2004.(9)
|
|
10
|
.11
|
|
Amendment to Purchase Agreement by and between Registrant and
Silicon Valley Bank dated as of April 28, 2004.(11)
|
|
10
|
.12
|
|
Accounts Receivable Purchase Modification Agreement by and
between Registrant and Silicon Valley Bank dated March 16,
2005.(15)
|
|
10
|
.13
|
|
Third Amendment to Loan and Security Agreement by and between
Registrant and Silicon Valley Bank dated June 16, 2006.(25)
|
|
10
|
.14
|
|
Fourth Amendment to Loan and Security Agreement by and between
Registrant and Silicon Valley Bank dated June 18, 2007.(25)
|
|
10
|
.15
|
|
Sixth Amendment to Loan and Security Agreement by and between
Registrant and Silicon Valley Bank dated July 31, 2008.(24)
|
|
10
|
.16
|
|
Seventh Amendment to Loan and Security Agreement by and between
Registrant and Silicon Valley Bank dated July 31, 2009.(25)
|
|
10
|
.17
|
|
Patent License Agreement by and between Registrant and Lucent
Technologies GRL LLC.(8)**
|
|
10
|
.18
|
|
License Agreement between Registrant and Sunpower dated May 2,
1995.(12)**
|
|
10
|
.19
|
|
Employment Agreement between Registrant and Jeffrey Quiram dated
as of February 14, 2005.(13)***
|
|
10
|
.20
|
|
Stock Option Grant and 2003 Equity Incentive Plan Option
Agreement between Registrant and Jeffrey Quiram dated February
14, 2005.(13)***
|
|
10
|
.21
|
|
Amendment to Employment Agreement between Registrant and Jeffrey
Quiram dated as of December 31, 2006.(20)***
|
|
10
|
.22
|
|
2003 Equity Incentive Plan as Amended May 25, 2005.(16)***
|
|
10
|
.23
|
|
Form of Notice of Grant of Stock Options and Option Agreement
for 2003 Equity Incentive Plan.(13)***
|
|
10
|
.24
|
|
Management Incentive Plan (July 24, 2006).(19)***
|
|
10
|
.25
|
|
Employment Agreement between Registrant and Terry White dated as
of April 11, 2005.(14)***
|
|
|
|
|
|
EXHIBIT
|
|
|
NUMBER
|
|
DESCRIPTION OF DOCUMENT
|
|
|
10
|
.26
|
|
Amendment to Employment Agreement between Registrant and Terry
White dated as of December 31, 2006.(20)***
|
|
10
|
.27
|
|
Form of Director and Officer Indemnification Agreement.(18)***
|
|
10
|
.28
|
|
Lease Agreement between the Registrant and 1200 Enterprises LLC
dated as of June 1, 2001.(6)
|
|
10
|
.29
|
|
Second Amendment to Lease Agreement between the Registrant and
1200 Enterprises LLC dated January 19, 2009.(25)
|
|
10
|
.30
|
|
Agreement between Registrant and Hunchun BaoLi Communication
Co., Ltd. (“BAOLI”) dated August 17, 2007.(21)
|
|
10
|
.31
|
|
First Amendment to Agreement between Registrant and BAOLI dated
November 1, 2007(22)
|
|
10
|
.32
|
|
Second Amendment to Agreement between Registrant and BAOLI dated
January 7, 2008.(22)
|
|
10
|
.33
|
|
Framework Agreement between Registrant and BAOLI dated November
8, 2007.(22)
|
|
10
|
.31
|
|
Sino-Foreign Equity Joint Venture Contract between
Superconductor Investments (Mauritius) Limited and BAOLI dated
December 8, 2007 (Exhibit A to Framework Agreement with
BAOLI).(22)
|
|
10
|
.35
|
|
Form of Technology and Trademark License Agreement between
Superconductor Investments (Mauritius) Limited, Registrant and
BAOLI (Exhibit B to Framework Agreement).(22)
|
|
21
|
|
|
List of Subsidiaries.(25)
|
|
23
|
.1
|
|
Consent of Stonefield Josephson Inc, Independent Registered
Public Accounting
Firm.v
|
|
23
|
.2
|
|
Consent of Manatt, Phelps & Phillips, LLP (included in
Exhibit 5.1 filed herewith).
|
|
24
|
.1
|
|
Powers of Attorney (included in the signature pages to the
Registration Statement)
|
|
|
|
(1) |
|
Incorporated by reference from Registrant’s Registration
Statement on
Form S-8
filed April 15, 1998 (File
No. 333-50137). |
|
(2) |
|
Incorporated by reference from Registrant’s Registration
Statement on
Form S-8
filed November 4, 1999 (File
No. 333-90293). |
|
(3) |
|
[Reserved]. |
|
(4) |
|
Incorporated by reference from Registrant’s Registration
Statement on
Form S-8
filed March 6, 2001 (File
No. 333-56606). |
|
(5) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2001. |
|
(6) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended March 30, 2002. |
|
(7) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended March 29, 2003. |
|
(8) |
|
Incorporated by reference from Registrant’s Annual Report
on
Form 10-K
for the year ended December 31, 2003, filed March 11,
2004. |
|
(9) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended April 3, 2004, filed May 12,
2004. |
|
(10) |
|
Incorporated by reference from Registrant’s Registration
Statement on
Form S-3
(File
No. 333-117107),
filed July 2, 2004. |
|
(11) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended July 3, 2004, filed August 11,
2004. |
|
(12) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended October 2, 2004, filed
November 10, 2004. |
|
(13) |
|
Incorporated by reference from Registrant’s Annual Report
on
Form 10-K
for the year ended December 31, 2004. |
|
(14) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended April 2, 2005. |
|
(15) |
|
Incorporated by reference from Registrants’ Current Report
on
Form 8-K
filed April 4, 2005. |
|
|
|
(16) |
|
Incorporated by reference from Registrant’s Current Report
on
Form 8-K
filed May 27, 2005. |
|
(17) |
|
Incorporated by reference from Registrant’s Current Report
on
Form 8-K
filed August 11, 2005. |
|
(18) |
|
Incorporated by reference from Registrant’s Annual Report
on
Form 10-K
for the year ended December 31, 2005. |
|
(19) |
|
Incorporated by reference from Registrant’s Current Report
on
Form 8-K
filed July 28, 2006. |
|
(20) |
|
Incorporated by reference from Registrant’s Annual Report
on
Form 10-K
for the year ended December 31, 2006. |
|
(21) |
|
Incorporated by reference from Registrant’s Quarterly
Report on
Form 10-Q
for the quarter ended September 29, 2007. |
|
(22) |
|
Incorporated by reference from Registrant’s Annual Report
on
Form 10-K
for the year ended December 31, 2007. |
|
(23) |
|
Incorporated by reference from Registrant’s Current Report
on
Form 8-K/A
filed February 25, 2008. |
|
(24) |
|
Incorporated by reference from Registrant’s Annual Report
on
Form 10-K
for the year ended December 31, 2008. |
|
(25) |
|
Incorporated by reference from Registrant’s Annual Report
on
Form 10-K
for the year ended December 31, 2009. |
|
v |
|
Filed herewith. |
|
* |
|
To be filed by amendment. |
|
** |
|
Confidential treatment has been previously granted for certain
portions of these exhibits. |
|
*** |
|
This exhibit is a management contract or compensatory plan or
arrangement. |