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 September 30, 2007

o
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

SCI ENGINEERED MATERIALS, INC.
(Exact name of small business issuer as specified in its charter)

Ohio
31-1210318
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)

2839 Charter Street, Columbus, Ohio 43228
(Address of principal executive offices)

(614) 486-0261
(Issuer's telephone number)

Superconductive Components, Inc.
(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 o

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

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 3,474,338 shares of Common Stock, without par value, were outstanding at October 31, 2007.

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


FORM 10-QSB

SCI ENGINEERED MATERIALS, INC.
 
Table of Contents

   
Page No.
PART I.
FINANCIAL INFORMATION
  
     
Item 1.
Financial Statements.
  
     
  
Balance Sheets as of September 30, 2007 (unaudited)
  
  
and December 31, 2006
3
     
  
Statements of Operations for the Three Months and Nine Months
  
  
Ended September 30, 2007 and 2006 (unaudited)
5
     
  
Statements of Cash Flows for the Nine Months
  
  
Ended September 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.
20
     
Item 5.
Other Information.
N/A
     
Item 6.
Exhibits.
20
     
Signatures.
21

2
 
PART I. FINANCIAL INFORMATION
 
ITEM 1.
FINANCIAL STATEMENTS
 
SCI ENGINEERED MATERIALS, INC.
 
BALANCE SHEETS

ASSETS    
   
September 30,
 
  December 31,
 
   
2007
 
  2006
 
   
(UNAUDITED)
      
CURRENT ASSETS
             
Cash
 
$
1,517,031
 
$
648,494
 
Accounts receivable
             
Trade, less allowance for doubtful accounts of $24,700 and $25,000
   
289,548
   
439,946
 
Contract
   
67,598
   
52,760
 
Other
   
5,000
   
-
 
Inventories
   
1,496,006
   
1,189,732
 
Prepaid expenses
   
30,395
   
47,466
 
Total current assets
   
3,405,578
   
2,378,398
 
             
PROPERTY AND EQUIPMENT,
             
AT COST  
             
Machinery and equipment
   
3,354,043
   
2,697,368
 
Furniture and fixtures
   
72,464
   
23,643
 
Leasehold improvements
   
301,551
   
299,551
 
Construction in progress
   
574,904
   
95,590
 
     
4,302,962
   
3,116,152
 
Less accumulated depreciation
   
(2,144,242
)
 
(2,012,312
)
     
2,158,720
   
1,103,840
 
 
             
OTHER ASSETS
             
Deposits
   
24,728
   
289,816
 
Intangibles
   
28,578
   
30,894
 
Total other assets
   
53,306
   
320,710
 
               
TOTAL ASSETS
 
$
5,617,604
 
$
3,802,948
 
 
The accompanying notes are an integral part of these financial statements.
 
3
 
SCI ENGINEERED MATERIALS, INC.

BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY   
            
 
 
September 30,
 
  December 31,
 
 
 
2007
 
  2006
 
   
(UNAUDITED)
      
CURRENT LIABILITIES
             
Capital lease obligation, current portion
 
$
256,896
 
$
70,799
 
Accounts payable
   
611,577
   
297,161
 
Accrued contract expenses
   
30,494
   
27,258
 
Accrued personal property taxes
   
13,226
   
22,500
 
Customer deposits
   
875,541
   
526,581
 
Accrued expenses and other
   
142,708
   
208,494
 
Total current liabilities
   
1,930,442
   
1,152,793
 
               
CAPITAL LEASE OBLIGATION, NET OF
             
CURRENT PORTION
   
919,935
   
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%;
             
24,566 and 25,185 issued and outstanding respectively
   
369,719
   
360,146
 
Common stock, no par value, authorized 15,000,000 shares;
             
3,474,338 and 3,432,915 shares issued and outstanding respectively
   
9,061,378
   
9,007,817
 
Additional paid-in capital
   
989,674
   
995,586
 
Accumulated deficit
   
(7,653,544
)
 
(7,859,087
)
     
2,767,227
   
2,504,462
 
               
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
 
$
5,617,604
 
$
3,802,948
 
 
The accompanying notes are an integral part of these financial statements.
 
4
 
SCI ENGINEERED MATERIALS, INC.
 
STATEMENTS OF OPERATIONS
 
THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
(UNAUDITED)

   
THREE MONTHS ENDED SEPT. 30,
 
NINE MONTHS ENDED SEPT. 30,
 
   
2007
 
  2006
 
2007
 
  2006
 
                     
TOTAL REVENUE
   
2,589,938
   
2,064,497
   
8,447,689
   
4,423,554
 
                           
TOTAL COST OF REVENUE
   
2,100,305
   
1,595,490
   
6,986,308
   
3,401,034
 
                           
GROSS PROFIT
   
489,633
   
469,007
   
1,461,381
   
1,022,520
 
                           
GENERAL AND ADMINISTRATIVE EXPENSE
   
213,111
   
221,759
   
669,423
   
667,013
 
                           
RESEARCH AND DEVELOPMENT EXPENSE
   
108,943
   
58,582
   
253,980
   
144,974