/2H5d 1$&%*$'PART I. FINANCIAL INFORMATION#'ITEM I. FINANCIAL STATEMENTS''SUPERCONDUCTIVE COMPONENTS, INC.'BALANCE SHEETS^MARCH 31,^DECEMBER 31, 'ASSETS ^2001 ^2000'(UNAUDITED)'CURRENT ASSETS 'Cash "$ 84,985 "$ 202,406$ 'Accounts and notes receivableA 'Trade, less allowance for doubtful accounts of $26,000 and '$26,000, respectively "457,324 "386,567 'Related party receivables  "4,283  "4,283'Inventories"824,526"617,468'Prepaid expenses "34,770 "39,766'Total current assets"1,405,888"1,250,490'PROPERTY AND EQUIPMENT,' AT COST'Machinery and equipment"2,024,267"1,959,086'Furniture and fixtures "17,170 "15,250'Leasehold improvements"312,801"305,586"2,354,238"2,279,922$'Less accumulated depreciation"1,749,743"1,701,150"604,495"578,772'OTHER ASSETS "46,645 "38,688$'TOTAL ASSETS$"$2,057,028$"$1,867,950Q''The accompanying notes are an integral part of these financial statements.')'SUPERCONDUCTIVE COMPONENTS, INC.*'BALANCE SHEETS+'(UNAUDITED)-^MARCH 31,-^DECEMBER 31,+.'LIABILITIES AND SHAREHOLDERS' EQUITY .^2001 .^2000/^(UNAUDITED)0'CURRENT LIABILITIES01'Capital lease obligation, current portion1"$ 26,9141"$ 26,27912'Note payable shareholders, current portion 2"10,869 2"10,8693'Accounts payable3"394,9493"294,028%4'Accounts payable, shareholders 4"2,828 4"1,8035'Accrued expenses5"117,7025"156,916 7'Total current liabilities7"553,2627"489,895':'CAPITAL LEASE OBLIGATION, NET OF;'CURRENT PORTION ;"52,151 ;"57,9650='NOTE PAYABLE SHAREHOLDERS, NET OF CURRENT>'PORTION>"113,401>"121,401'A'REDEEMABLE CONVERTIBLE PREFERREDB'STOCK (Series A)=C'10% cumulative, nonvoting, no par value, $1,000 stated5D'value, liquidation and mandatory redemption at9E'stated value per share plus unpaid and accumulated4F'dividends $285.96 and ($260.96), respectively F"93,061 F"87,658$I'COMMITMENTS AND CONTINGENCIESK'SHAREHOLDERS' EQUITYOL'Convertible preferred stock, Series B, 10% cumulative, nonvoting, no par;M'value, $10 stated value, optional redemption at 103%M"345,309M"338,4248P'Common stock, no par value, authorized 15,000,000EQ'shares; 1,821,727 and 1,816,977 shares issued and outstanding,R'respectivelyR"6,355,571R"6,334,696!S'Additional paid-in capital S"85,899 S"98,187T'Accumulated deficitT"(5,541,626)T"(5,660,276)V"1,245,153V"1,111,0311Y'TOTAL LIABILITIES AND STOCKHOLDERS' EQUITYY"$ 2,057,028Y"$ 1,867,950Q\'The accompanying notes are an integral part of these financial statements.'^'SUPERCONDUCTIVE COMPONENTS, INC._'STATEMENTS OF OPERATIONS1`'THREE MONTHS ENDED MARCH 31, 2001 AND 2000a'(UNAUDITED) c^2001 c^2000e"(RESTATED)f'SALES REVENUEf"$ 889,744f"$ 626,037 g'CONTRACT RESEARCH REVENUEg"170,436g"170,309i"1,060,180i"796,346l'COST OF SALES REVENUEl"601,276l"510,294(m'COST OF CONTRACT RESEARCH REVENUEm"122,916m"140,232o"724,192o"650,526r'GROSS MARGINr"335,988r"145,820*t'GENERAL AND ADMINISTRATIVE EXPENSESt"145,252t"109,895%v'SALES AND PROMOTIONAL EXPENSES v"65,968 v"74,380$x'INCOME (LOSS) FROM OPERATIONSx"124,768x"(38,455){'OTHER INCOME (EXPENSE)|'Interest|"(7,004)|"(12,373)}'Miscellaneous, net }"886 }"1,595"(6,118)"(10,778)&'INCOME (LOSS) BEFORE INCOME TAX"118,650"(49,233)'INCOME TAX EXPENSE "-- "--'NET INCOME (LOSS)"118,650"(49,233)#'DIVIDENDS ON PREFERRED STOCK"(9,360)"(20,924)*'ACCRETION OF REDEEMABLE CONVERTIBLE'PREFERRED (SERIES A)"(2,928)"(2,928)0'INCOME (LOSS) APPLICABLE TO COMMON SHARES"$ 106,362"$ (73,085)7'EARNINGS PER SHARE - BASIC AND DILUTIVE (NOTE 2))'NET INCOME (LOSS) PER COMMON SHARE 'Basic"$ 0.06"$ (0.06)'Diluted"$ 0.06"$ (0.06)*'WEIGHTED AVERAGE SHARES OUTSTANDING 'Basic"1,818,069"1,290,483'Diluted"1,826,140"1,290,483Q'The accompanying notes are an integral part of these financial statements.''SUPERCONDUCTIVE COMPONENTS, INC.'STATEMENTS OF CASH FLOWS1'THREE MONTHS ENDED MARCH 31, 2001 AND 2000'(UNAUDITED) '  ^2001 ^2000"(RESTATED)+'CASH FLOWS FROM OPERATING ACTIVITIES'Net income (loss)"$ 118,650"$ (49,233)I'Adjustments to reconcile net income (loss) to net cash provided by'operating activities:'Depreciation "48,302 "74,232'Amortization "610 "350'Inventory reserve"(13,091) "20,037&'Provision for doubtful accounts "-- "(312)3'Changes in operating assets and liabilities:%'(Increase) decrease in assets:'Accounts receivable"(70,757)"(67,137)'Inventories"(193,967)"(14,155)'Prepaid expenses "4,996"(7,386)'Other assets"(8,567) "--*'Increase (decrease) in liabilities:'Accounts payable"120,946 "19,107'Accrued expenses"(39,214) "76,322'Total adjustments"(150,742)"101,058:'Net cash provided by (used in) operating activities"(32,092) "51,825+'CASH FLOWS FROM INVESTING ACTIVITIES*'Purchases of property and equipment"(74,025)"(15,868),'Net cash used in investing activities"(74,025)"(15,868)+'CASH FLOWS FROM FINANCING ACTIVITIES'Bank overdraft "--"(29,419)2'Principal repayments on notes payable, bank "--"(5,617):'Principal repayments on long-term debt, shareholder"(8,000) "--5'Principal payments on capital lease obligation"(5,179)"(10,596)5'Proceeds from exercise of common stock options "1,875 "79,800&'Payment of cumulative dividends "--"(15,675)-'Redemption of Series A preferred stock "--"(54,450),'Net cash used in financing activities"(11,304)"(35,957)Q'The accompanying notes are an integral part of these financial statements.''SUPERCONDUCTIVE COMPONENTS, INC.+'STATEMENTS OF CASH FLOWS (CONTINUED)1'THREE MONTHS ENDED MARCH 31, 2001 AND 2000'(UNAUDITED) ^2001 ^2000^(RESTATED)&'NET INCREASE (DECREASE) IN CASH"(117,421)"-  !'CASH - Beginning of period"202,406"-  'CASH - End of period @" -      ''SUPPLEMENTAL DISCLOSURES OF CASH  'FLOW INFORMATION  ''Cash paid during the period for:  'Interest   'Income taxes" -" -    *'SUPPLEMENTAL DISCLOSURES OF NONCASH  )'INVESTING AND FINANCING ACTIVITIES  F'Common stock was issued as partial payment for accounts payable 8J"-  :'Preferred stock, series A converted to common stock" - S  L'Subordinate debt was issued to a shareholder as reimbursement for the  7'shareholder paying a note payable to the Company" -  @  P'The accompanying notes are an integral part of these financial statements