UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 0-31641

SUPERCONDUCTIVE COMPONENTS, INC.

(Exact name of small business issuer as specified in its charter)

 

Ohio   31-1210318

(State or other jurisdiction of

incorporation or organization)

  

(I.R.S. Employer

Identification No.)

2839 Charter Street, Columbus, Ohio 43228

(Address of principal executive offices)

(614) 486-0261

(Issuer’s telephone number)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days.    YES   x     NO   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES   ¨     NO   x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 3,467,100 shares of Common Stock, without par value, were outstanding at July 31, 2007.

Transitional Small Business Disclosure Format (Check one): YES   ¨     NO   x

 

Table of Contents

FORM 10-QSB

SUPERCONDUCTIVE COMPONENTS, INC.

Table of Contents

 

          Page No.

PART I.    FINANCIAL INFORMATION

   

Item 1.

    Financial Statements.   
  

Balance Sheets as of June 30, 2007 (unaudited) and December 31, 2006

    3
  

Statements of Operations For the Three Months and Six Months Ended June 30, 2007 and 2006 (unaudited)

    5
  

Statements of Cash Flows For the Six Months Ended June 30, 2007 and 2006 (unaudited)

    6
  

Notes to Financial Statements (unaudited)

    8

Item 2.

    Management’s Discussion and Analysis of Financial Condition and Results of Operations.    14

Item 3.

    Controls and Procedures.    19

PART II.  OTHER INFORMATION

   

Item 1.

    Legal Proceedings.    N/A

Item 2.

    Unregistered Sales of Equity Securities and Use of Proceeds.    N/A

Item 3.

    Defaults Upon Senior Securities.    N/A

Item 4.

    Submission of Matters to a Vote of Security Holders.    N/A

Item 5.

    Other Information.    N/A

Item 6.

    Exhibits.    20

Signatures.

    20

 

2

Table of Contents

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

SUPERCONDUCTIVE COMPONENTS, INC.

BALANCE SHEETS

 

    

June 30,

2007

     December 31,
2006		  
     (UNAUDITED)        
ASSETS     

CURRENT ASSETS

     

Cash

    $ 1,303,004     $ 648,494  

Accounts receivable

     

Trade, less allowance for doubtful accounts of $24,700 and $25,000

      373,210       439,946  

Contract

      52,760       52,760  

Other

      5,095       —    

Inventories

   

 

1,249,322

 

  

 

1,189,732

 

Prepaid expenses

      83,419       47,466  
                

Total current assets

   

 

3,066,810

 

  

 

2,378,398

 
                

PROPERTY AND EQUIPMENT, AT COST

     

Machinery and equipment

      3,044,157       2,697,368  

Furniture and fixtures

      25,848       23,643  

Leasehold improvements

      299,551       299,551  

Construction in progress

      640,395       95,590  
                
     4,009,951       3,116,152  

Less accumulated depreciation

      (2,085,430 )     (2,012,312 )
                
     1,924,521       1,103,840  
                

OTHER ASSETS

     

Deposits

      27,706       289,816  

Intangibles

      29,350       30,894  
                

Total other assets

      57,056       320,710  
                

TOTAL ASSETS

    $ 5,048,387     $ 3,802,948  
                

The accompanying notes are an integral part of these financial statements.

 

3

Table of Contents

SUPERCONDUCTIVE COMPONENTS, INC.

BALANCE SHEETS

 

    

June 30,

2007

     December 31,
2006		  
     (UNAUDITED)        
LIABILITIES AND SHAREHOLDERS’ EQUITY     

CURRENT LIABILITIES

     

Capital lease obligation, current portion

    $ 221,898     $ 70,799  

Accounts payable

      374,875       297,161  

Accrued contract expenses

      27,258       27,258  

Accrued personal property taxes

      19,187       22,500  

Customer deposits

   

 

650,069

 

  

 

526,581

 

Accrued expenses and other

      183,237       208,494  
                

Total current liabilities

   

 

1,476,524

 

  

 

1,152,793

 
                

CAPITAL LEASE OBLIGATION, NET OF CURRENT PORTION

      831,005       145,693  
                

COMMITMENTS AND CONTINGENCIES

      —         —    
                

SHAREHOLDERS’ EQUITY

     

Convertible preferred stock, Series B, 10% cumulative, nonvoting, no par value, $10 stated value, optional redemption at 103%; 25,185 issued and outstanding

      372,739       360,146  

Common stock, no par value, authorized 15,000,000 shares; 3,467,100 and 3,432,915 shares issued and outstanding respectively

      9,066,309       9,007,817  

Additional paid-in capital

      991,610       995,586  

Accumulated deficit

      (7,689,800 )     (7,859,087 )
                
     2,740,858       2,504,462  
                

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

    $ 5,048,387     $ 3,802,948  
                

The accompanying notes are an integral part of these financial statements.

 

4

Table of Contents

SUPERCONDUCTIVE COMPONENTS, INC.

STATEMENTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2007 AND 2006

AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006

(UNAUDITED)

 

     THREE MONTHS ENDED
JUNE 30,		     SIX MONTHS ENDED
JUNE 30,		  
     2007     2006     2007     2006  

SALES REVENUE

    $ 3,403,742     $ 1,158,434     $ 5,857,751     $ 2,316,965  

CONTRACT RESEARCH REVENUE

      —         —         —         42,092  
                                
     3,403,742       1,158,434       5,857,751       2,359,057  
                                

COST OF SALES REVENUE

      2,890,574       877,894       4,886,003       1,788,137  

COST OF CONTRACT RESEARCH

      —         —         —         17,407  
                                
     2,890,574       877,894       4,886,003       1,805,544  
                                

GROSS PROFIT

      513,168       280,540       971,748       553,513  

GENERAL AND ADMINISTRATIVE EXPENSE

      219,716       232,524       456,312       445,254  

RESEARCH AND DEVELOPMENT EXPENSE

      81,873       39,216       145,037       86,392  

SELLING EXPENSE

      110,449       65,993       207,851       134,096  
                                

INCOME (LOSS) FROM OPERATIONS

      101,130       (57,193 )     162,548       (112,229 )
                                

OTHER INCOME (EXPENSE)

         

Interest income

      14,432       10,258       26,988       21,053  

Interest expense

      (18,212 )     (3,482 )     (24,116 )     (5,506 )

Gain on disposal of equipment

      4,782       —         4,782       —    

Miscellaneous, net

      (457 )     8,213       (915 )     7,501  
                                
     545       14,989       6,739       23,048  
                                

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAX

      101,675       (42,204 )     169,287       (89,181 )

INCOME TAX EXPENSE

      —         —         —         —    
                                

NET INCOME (LOSS)

      101,675       (42,204 )     169,287       (89,181 )

DIVIDENDS ON PREFERRED STOCK

      (6,296 )     (6,296 )     (12,592 )     (12,592 )
                                

INCOME (LOSS) APPLICABLE TO COMMON SHARES

    $ 95,379     $ (48,500 )   $ 156,695     $ (101,773 )
                                

EARNINGS PER SHARE - BASIC AND DILUTED (Note 5)

        

NET INCOME (LOSS) PER COMMON SHARE BEFORE DIVIDENDS ON PREFERRED STOCK

         

Basic

    $ 0.03     $ (0.01 )   $ 0.05     $ (0.03 )
                                

Diluted

    $ 0.02     $ (0.01 )   $ 0.04     $ (0.03 )
                                

NET INCOME (LOSS) PER COMMON SHARE AFTER DIVIDENDS ON PREFERRED STOCK

         

Basic

    $ 0.03     $ (0.01 )   $ 0.05     $ (0.03 )
                                

Diluted

    $ 0.02     $ (0.01 )   $ 0.04     $ (0.03 )
                                

WEIGHTED AVERAGE SHARES OUTSTANDING

         

Basic

      3,462,073       3,425,915       3,451,032       3,425,915  
                                

Diluted

      4,287,082       3,425,915       4,240,350       3,425,915  
                                

The accompanying notes are an integral part of these financial statements.

 

5

Table of Contents

SUPERCONDUCTIVE COMPONENTS, INC.

STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2007 AND 2006

(UNAUDITED)

 

     2007     2006  

CASH FLOWS FROM OPERATING ACTIVITIES

     

Net income (loss)

    $ 169,287     $ (89,181 )
                

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

     

Depreciation and accretion

      137,683       105,706  

Amortization

      1,544       1,544  

Stock based compensation

      28,626       1,436  

Gain on sale of equipment

      (4,782 )     —    

Inventory reserve

      5,765       (185 )

Provision for doubtful accounts

      (300 )     —    

Changes in operating assets and liabilities:

     

(Increase) decrease in assets:

     

Accounts receivable

      61,941       (43,308 )