e424b5
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PROSPECTUS SUPPLEMENT
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Filed Pursuant to Rule 424(b)(5) |
(To Prospectus Dated February 13, 2008)
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Registration No. 333-148115 |
3,752,005 shares
Common Stock
Pursuant to this prospectus supplement and the accompanying prospectus, we are offering 3,752,005 shares of our common stock to selected institutional investors pursuant to one or more Common Stock
Purchase Agreements, each dated on or about June 22, 2009, between us and each selected
institutional investor. The offering price will be $3.00 per share.
Our common stock is currently traded on the NASDAQ Capital Market under the symbol SCON. On
June 18, 2009, the reported closing price per share of our common stock was $4.21. As of June 18,
2009, the aggregate market value of our outstanding common stock held by non-affiliates was
approximately $50,974,638, based on 18,760,028 shares of outstanding common stock, of which
6,652,038 shares are held by affiliates, and a price of $4.21 per share, which was the last
reported sale price of our common stock as quoted on the NASDAQ Capital Market on such date. We
have not offered any securities pursuant to General Instruction I.B.6. of Form S-3 during the prior
12 calendar month period that ends on, and includes, the date of this prospectus supplement.
We have retained MDB Capital Group LLC to act as placement agent for us in connection with
the shares offered by this prospectus supplement.
Investing in our securities involves a high degree of risk. Before deciding whether to invest
in our securities, you should consider carefully the risks that we have described in this
prospectus supplement under the caption Risk Factors starting on page S-4 of this prospectus
supplement and under the caption Risk Factors in our most recently filed Annual Report on Form
10-K, as filed with the Securities and Exchange Commission, which is incorporated herein by
reference in its entirety.
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Per Share |
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Total |
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Public offering price |
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$ |
3.00 |
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$ |
11,256,015 |
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Placement Agents fee (1) |
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$ |
0.18 |
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$ |
675,361 |
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Proceeds to us (before expenses) |
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$ |
2.82 |
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$ |
10,580,654 |
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(1) |
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6.0% of the gross proceeds to be paid to the placement
agent. |
The placement agent is not purchasing or selling any securities pursuant to this prospectus
supplement or the accompanying prospectus, nor is it required to sell any specific number or dollar
amount of the shares of common stock offered hereby, but will use its reasonable efforts to sell
the shares of common stock offered. We expect that delivery of the shares of common stock being
offered under this prospectus supplement will be made to investors on or about June 23, 2009.
Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or accuracy of this
prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal
offense.
MDB CAPITAL GROUP LLC
The date of this prospectus supplement is June 22, 2009
TABLE OF CONTENTS
Prospectus Supplement
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S-4 |
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S-5 |
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S-5 |
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S-5 |
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S-6 |
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S-7 |
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S-7 |
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Prospectus |
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You should rely only on information contained in this prospectus supplement, the accompanying
prospectus and the documents we incorporate by reference in this prospectus supplement and the
accompanying prospectus. We have not authorized anyone to provide you with information that is
different. We are offering to sell and seeking offers to buy shares of our common stock only in
jurisdictions where such offers and sales are permitted. You should not assume that the information contained in this
prospectus supplement and the accompanying prospectus is accurate on any date subsequent to their respective
dates, regardless of the time of delivery of this prospectus supplement and the accompanying
prospectus or of any sale of our common stock.
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement is a supplement to the accompanying prospectus that is also a part
of this document. This prospectus supplement and the accompanying prospectus are part of a shelf
registration statement that we filed with the Securities and Exchange Commission, or the SEC. Under
the shelf registration process, we may offer from time to time shares of our common stock,
preferred stock and warrants. We have $74,000,000 remaining under our shelf registration statement
i
prior to the sale of any of the shares of our common stock in this offering. In the
accompanying prospectus, we provide you with a general description of the securities we may offer
from time to time under our shelf registration statement. In this prospectus supplement, we provide
you with specific information about the shares of our common stock that we are selling in this
offering. This prospectus supplement and the accompanying prospectus and the documents incorporated
by reference herein and therein include important information about us, our common stock being
offered and other information you should know before investing. This prospectus supplement also
adds, updates and changes information contained in the accompanying prospectus. You should read
both this prospectus supplement and the accompanying prospectus as well as the additional
information described under Where You Can Find More Information before investing in shares of our
common stock.
ii
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights selected information about us and this offering. This information is
not complete and does not contain all the information you should consider before investing in our
common stock. You should carefully read this entire prospectus supplement and the entire
accompanying prospectus, including the Risk Factors section beginning on page S-4 of this
prospectus supplement and the financial statements and the other information incorporated by
reference in this prospectus supplement and the accompanying prospectus, before making an
investment decision.
Our Business
We are a leading company in high temperature superconductor, or HTS, materials and related
technologies. HTS materials have the unique ability to conduct various signals or energy (e.g.,
electrical current or radio frequency, or RF, signals) with little or no resistance when cooled to
critical temperatures. Electric currents that flow through conventional conductors encounter
resistance that requires power to overcome and generates heat. HTS materials can substantially
improve the performance characteristics of electrical systems, reducing power loss, lowering heat
generation and decreasing electrical noise. Circuits designed to remove interference inherent in
some RF signals can also be made from HTS materials. Commercial use of HTS materials requires a
number of cutting edge technologies, including development of HTS materials, specialized
manufacturing expertise to create uniform thin layers of these materials, expert designs of
circuits optimized for HTS materials, and technologies to maintain an extremely low temperature
environment for HTS applications (although the critical temperatures for HTS are high compared
with traditional superconductors, they are still extremely cold by other standards).
Our Proprietary Technology
We are focused on research and development to maintain our technological edge. As of December
31, 2008, we had 29 employees in our research and development division; eight of our employees have
Ph.D.s, and 13 others hold advanced degrees in physics, materials science, electrical engineering
and other fields. Our development efforts over the last 21 years have yielded an extensive patent
portfolio as well as critical trade secrets, unpatented technology and proprietary knowledge. As of
December 31, 2008, we held 57 U.S. patents in the following categories:
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7 patents for technologies directed toward producing thin-film materials and
structures, which expire between 2010 and 2025. We have developed a proprietary
state-of-the-art manufacturing process for producing HTS thin-films of the highest
quality. |
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29 patents for cryogenic and non-microwave circuit designs, which expire between
2010 and 2026. The expertise of our highly qualified team has allowed us to design and
fabricate extremely small, high-performance circuits including RF signal filters. |
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17 patents covering cryogenics, packaging and systems, which expire between 2013
and 2025. Our proprietary and patented cryogenic packaging innovation provides us with a
significant competitive advantage in maintaining our HTS materials at their critical
temperatures. |
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4 patents covering other superconducting technologies, which expire between 2013
and 2015. |
As of December 31, 2008, we also had 15 issued foreign patents, 25 U.S. patent applications
pending and 44 foreign applications patents pending.
We are currently focusing our efforts on applications in areas such as:
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Wireless Networks. 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 all while
reducing capital and operating costs. |
S-1
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Reconfigurable Handset Filters. The trend in the wireless handset industry is to
continually reduce size and cost, while adding more features and making the unit more
adaptable to different air interfaces and frequencies throughout the world. This drives
the need for more complex and reconfigurable transceivers. We believe our strong
intellectual property and expertise in frequency agile and thin film filters position us
well to meet this demand. |
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Superconducting Power Transmission Lines. We have entered into a collaborative
effort and signed a Material Transfer Agreement with the Department of Energys Los
Alamos National Laboratory, or LANL to apply our HTS expertise to LANLs research
initiative to develop HTS coated conductors for power transmission lines. If successfully
developed, HTS superconducting cables could replace copper power transmission lines,
resulting in higher capacity with less resistive cable losses. |
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Government Products. As the worldwide leader in developing tunable HTS filter
systems for military applications, we continue to be a crucial partner in the U.S.
governments future success. Our high-performance HTS filter systems have been proven to
increase the detection range, reduce interference, and in some cases, detect signals that
were previously undetectable with conventional technology. Currently, we actively
participate in the development of technologies for application in military
communications, signals intelligence, and electronic warfare. |
Our development efforts can take a significant number of years to commercialize, and we must
overcome significant technical barriers and deal with other significant risks. You can get more
information regarding our business and industry by reading our Annual
Report on Form 10-K for the
year ended December 31, 2008 filed with the SEC on March 20, 2009 and the other reports we file
with the SEC.
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 supplement or the accompanying prospectus. Our common stock is
currently traded on the NASDAQ Capital Market under the symbol SCON.
The Offering
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Securities
offered
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3,752,005 shares of our common stock |
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Common stock to be outstanding after this offering
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22,512,033 shares |
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Manner of
offering
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The sale of shares of our common stock
will be made pursuant to one or more
Common Stock Purchase Agreements between
us and each of the selected
institutional investors. See Plan of
Distribution. |
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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 under this
prospectus supplement for working
capital and general corporate purposes.
General corporate purposes may include
capital expenditures. See Use of
Proceeds. |
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NASDAQ Capital Market symbol
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SCON |
S-2
The total number of shares of our common stock outstanding after this offering is based on
18,705,028 shares outstanding as of March 28, 2009, 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; |
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1,215,005 shares of our common stock issuable upon exercise of stock options
under our stock plans at a weighted average exercise price of $22.23 per share; |
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352,466 shares of our common stock reserved for issuance under various
outstanding warrant agreements, at a weighted average exercise price of $7.07 per
share; and |
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246,528 shares of our common stock reserved for future issuance under our 2003
Equity Incentive Plan. |
Unless otherwise specifically stated, information throughout this prospectus supplement
assumes that none of our outstanding options or warrants to purchase shares of our common stock are
exercised.
S-3
RISK FACTORS
Investment in our common stock involves a high degree of risk. You should carefully consider
the risks described below, those risks described in the section entitled Risk Factors, and those
risks described in the section entitled Managements 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, 2008, which has been filed with the Securities and Exchange
Commission and is incorporated herein by reference in its entirety, as well as other information in
this prospectus supplement, the accompanying prospectus, in any other documents incorporated by
reference, and in any Current Report on Form 8-K filed subsequent to
our Annual Report on Form 10-K, before
purchasing any of our common stock. 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 supplement, the accompanying
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 this Offering
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 shareholders 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 $3.00 per share, if you purchase shares of common stock in this offering, you will
suffer immediate and substantial dilution of $2.02 per share in the net tangible book value of the
common stock at March 28, 2009. 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.
Our publicly filed reports are subject to review by the SEC, and any significant changes or
amendments required as a result of any such review may result in material liability to us and may
have a material adverse impact on the trading price of our common stock.
The reports of publicly traded companies are subject to review by the SEC from time to time
for the purpose of assisting companies in complying with applicable disclosure requirements, and
the SEC is required to undertake a comprehensive review of a companys reports at least once every
three years under the Sarbanes-Oxley Act of 2002. SEC reviews may be initiated at any time. We
could be required to modify, amend or reformulate information contained in prior filings as a
result of an SEC review. Any modification, amendment or reformulation of information contained in
such reports could be significant and result in material liability to us and have a material
adverse impact on the trading 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.
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 3,752,005 shares of our common
stock offered pursuant to this prospectus supplement, we will have approximately 22,512,033 shares
of our common stock outstanding and 28,627,263 shares of common stock equivalents (including shares
of our preferred stock that could be converted into shares of our common stock). In February 2008,
Hunchun BaoLi Communication Co. Ltd. and its affiliates (collectively BAOLI) acquired approximately
3,101,361 shares of our common stock and 611,523 shares of our Series A Preferred Stock which could
be converted 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 of 1933. 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 in any 90 day
period. BAOLI also has registration rights covering 2,101,361 of its shares. In May 2009, BAOLI
made a filing with the SEC stating its intention to sell up to 300,000 of its shares of our common
stock. 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.
S-4
Additional Risks Related to our Business, Industry and an Investment in our Common Stock
For a discussion of additional risks associated with our business, our industry and an
investment in our common stock, see the section entitled Risk Factors in our most recent Annual
Report on Form 10-K, as filed with the Securities and Exchange Commission on March 20, 2009, as
well as the disclosures contained in documents filed by us thereafter pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, which are incorporated by
reference into, and deemed to be a part of, the accompanying prospectus.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement and the documents incorporated by reference into it contain
forward-looking statements that involve risks and uncertainties. We have made these statements in
reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our
forward-looking statements relate to future events or our future performance and include, but are
not limited to, statements concerning our business strategy, future commercial revenues, market
growth, capital requirements, new product introductions, expansion plans and our funding
requirements. Other statements contained in our filings that are not historical facts are also
forward-looking statements. We have tried, wherever possible, to identify forward-looking
statements by terminology such as may, will, could, should, expects, anticipates,
intends, plans, believes, seeks, estimates and other comparable terminology.
Forward-looking statements are not guarantees of future performance and are subject to various
risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may
differ materially from those expressed in forward-looking statements. They can be affected by many
factors, including, those discussed in the section captioned Risk Factors beginning on page S-4
of this prospectus supplement and in the section captioned Managements Discussion and Analysis of
Financial Condition and Results of Operations beginning on page 15 of our most recent Quarterly
Report on Form 10-Q filed with the SEC. Forward-looking statements are based on information
presently available to senior management, and we do not assume any duty to update our
forward-looking statements. Investors in our common stock should consider all risks and
uncertainties disclosed in our filings with the SEC described on page S-7 under the heading Where
You Can Find More Information, all of which are accessible on the SECs website at www.sec.gov.
USE OF PROCEEDS
We estimate that the net proceeds to us from this offering will be approximately $10.5 million,
after deducting fees due the placement agent and our estimated offering expenses, as described in
the section captioned Plan of Distribution on page S-6. We currently intend to use the net
proceeds from the sale of our common stock under this prospectus supplement for working capital and
general corporate purposes. General corporate purposes may include 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 the securities. We may invest the net proceeds temporarily until we use them for their stated
purpose.
DETERMINATION OF OFFERING PRICE
We determined the offering price of the common stock being offered by this prospectus
supplement based principally on negotiations between us, the placement agent and the selected
institutional investors and on our consideration of the closing prices (including high, low and
average prices) and trading volumes of our common stock on the NASDAQ Capital Market primarily
during the 30 trading days preceding the date we determined the offering price. No independent
appraisal or valuation was obtained in determining the offering price. The offering price in this
offering reflects a discount of approximately 28.7% from the reported closing price per share of our
common stock of $4.21 on June 18, 2009.
DILUTION
Our net tangible book value as of March 28, 2009 was approximately $11.6 million, or $0.62 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
March 28, 2009. Assuming that we issue all 3,752,005 of the offered shares of our common stock at the
public offering price of $3.00 per share, and after deducting the commissions
S-5
and estimated offering expenses payable by us, our net tangible book value as of March 28,
2009, would have been approximately $22 million, or $0.98 per share of our common stock. This amount
represents an immediate increase in net tangible book value of $0.36 per share to our existing
stockholders and an immediate dilution in net tangible book value of $2.02 per share to new investors
purchasing shares 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 |
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3.00 |
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Net tangible book value per share as of March 28, 2009 |
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0.62 |
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0.36 |
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Adjusted net tangible book value per share after this offering |
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0.98 |
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Dilution in net tangible book value per share to new investors |
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2.02 |
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As of March 28, 2009, the following shares were not included in the above calculation:
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1,215,005 shares of our common stock issuable upon exercise of stock options under
our stock plans at a weighted average exercise price of $22.23 per share; |
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352,466 shares of our common stock reserved for issuance under various outstanding
warrant agreements, at a weighted average exercise price of $7.07 per share; and |
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246,528 shares of our common stock reserved for future issuance under our 2003
Equity Incentive Plan. |
To the extent that options or warrants outstanding as of March 28, 2009 have been or may be
exercised or other shares are issued, there may be a further dilution to new investors.
PLAN OF DISTRIBUTION
We have entered into a placement agent agreement with MDB Capital Group LLC pursuant to which
MDB Capital Group LLC is acting as our exclusive placement agent and will use reasonable efforts to
arrange for the sale to selected institutional investors of up to
3,752,005 shares we are offering by this
prospectus supplement. The placement agent has no obligation to buy any of the common stock from
us, nor is it required to arrange the purchase or sale of any specific number or dollar amount of
the common stock.
We will enter into purchase agreements directly with the investors in connection with this
offering. Under the terms of the placement agent agreement and the form of purchase agreement we
make certain representations, warranties and covenants, including, relating to the absence of a
stop order suspending the effectiveness of the registration statement of which this prospectus
supplement and the accompanying base prospectus are a part, the absence of any material adverse
change in our business, and compliance with state securities laws.
We currently anticipate the closing of the sale of the common stock on or about June 23, 2009.
On such closing date, the following will occur:
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we will receive funds in the amount of the aggregate purchase price of the
securities being sold by us on such closing date; |
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we will deliver shares of common stock being sold on such closing date in
book-entry form; and |
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we will pay MDB Capital Group LLC a placement agent fee in accordance with the
terms of the placement agent agreement. |
We have agreed to pay the placement agent a cash fee equal to 6.0% of the gross proceeds of
the offering. As a result, assuming all of the securities offered pursuant to this prospectus
supplement are issued and sold by us, we
S-6
will pay the placement agent a cash fee equal to $675,361. In no event will the maximum commission
or discount to be received by any Financial Industry Regulatory Authority (FINRA) member or
independent broker-dealer exceed 8% for the sale of the securities registered herein.
There is no minimum offering amount required as a condition to closing in this offering.
Accordingly, we may sell substantially fewer than 3,752,005 shares, in which case our net proceeds would be
substantially reduced and the total fee payable to the placement agent may be substantially less
than the maximum total set forth above.
We have agreed to indemnify the placement agent against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, arising from the placement agents
engagement as exclusive placement agent in connection with this offering. We have also agreed to
contribute to payments the placement agent may be required to make in respect of such liabilities.
The placement agent agreement with the placement agent will be filed as an exhibit to a
Current Report on Form 8-K that will be filed with the SEC in connection with the consummation of
this offering.
The placement agent has informed us that it will not engage in over-allotment, stabilizing
transactions or syndicate covering transactions in connection with this offering.
The placement agent may, from time to time, engage in transactions with and perform services
for us in the ordinary course of its business.
Our common stock currently is traded on the NASDAQ Capital Market under the symbol SCON.
Registrar and Transfer Company is the transfer agent for our common stock.
LEGAL MATTERS
Certain legal matters relating to the validity of our common stock offered by this prospectus
supplement will be passed upon for us by Manatt, Phelps & Phillips, LLP, Los Angeles, California.
Certain legal matters in connection with this offering will be passed upon for the placement agent
by Golenbock Eiseman Assor Bell & Peskoe LLP, New York, New York.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-3 to register the securities
offered by this prospectus supplement. However, this prospectus supplement does not contain all of
the information contained in the registration statement and the exhibits and schedules to the
registration statement. We encourage you to carefully read the registration statement and the
exhibits and schedules to the registration statement. Statements in this prospectus supplement and
the accompanying 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.
We file annual, quarterly, and current reports, proxy statements and other information with
the SEC. Our SEC filings are available to the public on the SECs website at www.sec.gov and on the
investor relations page of our website at www.suptech.com. Except for those SEC filings
incorporated by reference in this prospectus supplement, none of the other information on our
website is part of this prospectus supplement. 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.
S-7
PROSPECTUS
$80,000,000
We may offer, from time to time, together or separately, up to $80,000,000 aggregate amount,
of:
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common stock |
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preferred stock |
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warrants |
We may offer the securities in one or more series, in amounts, at prices and on terms
determined at the time of offering. We will provide the specific terms of any securities we
actually offer for sale in supplements to this prospectus.
You should read carefully this prospectus, each supplement and the documents incorporated by
reference into this prospectus before you invest in any of our securities. This prospectus may not
be used to sell securities unless accompanied by a prospectus supplement.
Our common stock is traded on the NASDAQ Stock Market under the symbol SCON. On February 1,
2008, the closing sale price of our common stock on the NASDAQ Stock Market was $5.30 per share.
Our principal executive offices are located at 460 Ward Drive, Santa Barbara, California
93111-2310, and our telephone number is (805) 690-4500.
We will sell these securities directly, through agents, dealers or underwriters as designated
from time to time, or through a combination of these methods. We reserve the sole right to accept,
and together with our agents, from time to time, to reject in whole or in part any proposed
purchase of securities to be made directly or through agents. If our agents or any dealers or
underwriters are involved in the sale of securities, the applicable prospectus supplement will set
forth the names of the agents, dealers or underwriters and any applicable commissions or discounts.
You should carefully consider the risk factors included in the documents incorporated by
reference in this prospectus before making a decision to purchase our securities.
Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of the securities described in this prospectus or passed upon the adequacy
or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is February 13, 2008.
TABLE OF CONTENTS
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About This Prospectus |
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Documents Incorporated by Reference |
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Where You Can Find More Information |
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Special Note Regarding Forward-Looking Statements |
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Summary |
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Use of Proceeds |
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Ratio of Earnings to Fixed Charges |
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Description of Capital Stock |
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Description of Warrants |
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Plan of Distribution |
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Legal Matters |
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Experts |
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we filed with the Securities and Exchange
Commission, or the SEC, using a shelf registration process. Under the shelf registration process,
using this prospectus, together with a prospectus supplement, we may sell, from time to time, in
one or more offerings, any combination of the securities described in this prospectus in a dollar
amount that does not exceed $80,000,000 in the aggregate. This prospectus provides you with a
general description of the securities we may offer. Each time we offer securities, a prospectus
supplement will be provided that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information contained in this
prospectus.
You should read this prospectus, the applicable prospectus supplement and the information
incorporated by reference in this prospectus before making an investment in our securities. See
Where You Can Find More Information for more information. You should rely only on the information
contained in or incorporated by reference in this prospectus or a prospectus supplement. We have
not authorized anyone to provide you with different information. This document may be used only in
jurisdictions where offers and sales of these securities are permitted. You should not assume that
information contained in this prospectus, in any supplement to this prospectus, or in any document
incorporated by reference is accurate as of any date other than the date on the front page of the
document that contains the information, regardless of when this prospectus is delivered or when any
sale of our securities occurs.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference information that we file with them, which
means that we can disclose important information to you by referring you to those documents. The
information incorporated by reference is an important part of this prospectus, and the information
that we file later with the SEC will automatically update and supersede this information. The
following documents have been previously filed by us with the SEC pursuant to the Exchange Act and
are hereby incorporated by reference in this prospectus and the registration statement of which
this prospectus forms a part:
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our Annual Report on Form 10-K for the year ended December 31, 2006, as amended by
Amendment No. 1 on Form 10-K/A filed on April 24, 2007; |
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our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2007, June 30,
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our Current Reports on Form 8-K filed with the SEC on January 24, 2007, February 6,
2007, March 7, 2007, March 8, 2007, April 18, 2007, April 24, 2007, August 22, 2007,
November 15, 2007, December 17, 2007 and January 8, 2008; and |
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the description of our common stock contained in our registration statement on Form
8-A filed with the SEC on January 4, 1993. |
Certain Current Reports on Form 8-K dated both prior to and after the date of this prospectus
are or will be furnished to the Securities and Exchange Commission and shall not be deemed filed
with the Securities and Exchange Commission and will not be incorporated by reference into this
prospectus. However, all other reports and documents filed by us after the date of this prospectus
under Sections 13(a), 14 and 15(d) of the Securities Exchange Act of 1934 prior to the termination
of the offering of the securities covered by this prospectus are also incorporated by reference in
this prospectus and are considered to be part of this prospectus from the date those documents are
filed. If you make a request for this information in writing or by telephone, we will provide you,
without charge, a copy of any or all of the information incorporated by reference in the
registration statement of which this prospectus forms a part. Requests for this information should
be submitted in writing to our Secretary, at our principal executive offices at Superconductor
Technologies Inc., 460 Ward Drive, Santa Barbara, California 93111-2310 or by telephone at (805)
690-4500.
This prospectus is part of a registration statement we have filed with the SEC. You should
rely only on the information incorporated by reference or provided in this prospectus, or any
supplement thereof. No one else is authorized to provide you with different information. You should
not rely on any other representations. We are not
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making an offer of these securities in any state where the offer is not permitted. Our affairs
may change after this prospectus or any supplement is distributed. You should not assume that the
information in or incorporated by reference into this prospectus or any supplement is accurate as
of any date other than the date on the front of those documents. You should read all information
supplementing or incorporated by reference into this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other information with the
SEC. You may read and copy any document we file with the SEC at the SECs Public Reference Room at
100 F Street, N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the Public Reference Room. The SEC also maintains a website that
contains reports, proxy and information statements, and other information regarding registrants
that file electronically with the SEC at http://www.sec.gov. In addition, we maintain a web site
that contains information about us at http://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.
We have filed with the SEC a registration statement on Form S-3, of which this prospectus is a
part, including exhibits, schedules and amendments filed with, or incorporated by reference in,
this registration statement, under the Securities Act of 1933, as amended, or the Securities Act,
with respect to the shares of our common stock registered hereby. This prospectus does not contain
all of the information set forth in the registration statement and exhibits and schedules to the
registration statement. For further information with respect to our company and the shares of our
common stock registered hereby, reference is made to the registration statement, including the
exhibits to the registration statement. Statements contained in this prospectus as to the contents
of any contract or other document referred to in, or incorporated by reference in, this prospectus
are not necessarily complete and, where that contract is an exhibit to the registration statement,
each statement is qualified in all respects by the exhibit to which the reference relates. Copies
of the registration statement, including the exhibits and schedules to the registration statement,
may be examined at the SECs Public Reference Room at 100 F Street, N.E., Washington D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public
Reference Room. Copies of all or a portion of the registration statement can be obtained from the
public reference room of the SEC upon payment of prescribed fees. This registration statement is
also available to you on the SECs web site, http://www.sec.gov.
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, and Section 21E of the
Securities Exchange Act of 1934, as amended. You can find many (but not all) of these statements by
looking for words such as approximates, believes, expects, anticipates, estimates,
intends, plans would, may or other similar expressions in this prospectus. We claim the
protection of the safe harbor contained in the Private Securities
Litigation Reform Act of 1995. We caution investors that any forward-looking statements
presented or incorporated by reference in this prospectus, or which we may make orally or in
writing from time to time, are based on the beliefs of, assumptions made by, and information
currently available to, us. Such statements are based on assumptions and the actual outcome will be
affected by known and unknown risks, trends, uncertainties and factors that are beyond our control
or ability to predict. Although we believe that our assumptions are reasonable, they are not
guarantees of future performance and some will inevitably prove to be incorrect. As a result, our
actual future results can be expected to differ from our expectations, and those differences may be
material. Accordingly, investors should use caution in relying on past forward-looking statements,
which are based on known results and trends at the time they are made, to anticipate future results
or trends.
Some of the risks and uncertainties that may cause our actual results, performance or
achievements to differ materially from those expressed or implied by forward-looking statements
include the following: limited assets and a history of losses; limited number of potential
customers; limited number of suppliers for some of our components; no significant backlog from
quarter to quarter; our market is characterized by rapidly advancing technology. For further
discussion of these and other factors, see Risk Factors in the documents incorporated by
reference in this prospectus.
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This prospectus and all subsequent written and oral forward-looking statements attributable to
us or any person acting on our behalf are expressly qualified in their entirety by the cautionary
statements contained or referred to in this section. We do not undertake any obligation to release
publicly any revisions or updates to our forward-looking statements to reflect events or
circumstances or changes to our assumptions that occur after the date of this prospectus.
SUMMARY
Our Company
We develop, manufacture and market high performance infrastructure products for wireless voice
and data applications. Wireless carriers face many challenges in todays competitive marketplace.
Minutes of use are skyrocketing, and wireless users now expect the same quality of service from
their mobile devices as from their landline phones. We help wireless carriers meet these challenges
by doing more with less.
Our 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 all while reducing capital and operating costs. SuperLink incorporates patented
high-temperature superconductor (HTS) technology to create a receiver front-end that enhances
network performance. Today, we are leveraging our expertise and proprietary technology in radio
frequency (RF) engineering to expand our product line beyond HTS technology. We believe our RF
engineering expertise provides us with a significant competitive advantage in the development of
high performance, cost-effective solutions for the front end of wireless telecommunications
networks.
We have three product offerings:
SuperLink. In order to receive uplink signals from wireless handsets, base stations
require a wireless filter system to eliminate out-of-band interference. SuperLink combines HTS
filters with a proprietary cryogenic cooler and an ultra low-noise amplifier. The result is a
highly compact and reliable receiver front-end that can simultaneously deliver both high
selectivity (interference rejection) and high sensitivity (detection of low level signals).
SuperLink delivers significant performance advantages over conventional filter systems.
AmpLink. AmpLink is designed to address the sensitivity requirements of wireless
base stations. AmpLink is a ground-mounted unit which utilizes a high-performance amplifier. The
enhanced uplink performance provided by AmpLink improves network coverage immediately and avoids
the installation and maintenance costs associated with tower mounted alternatives.
SuperPlex. SuperPlex is our line of multiplexers that provides extremely low
insertion loss and excellent cross-band isolation. SuperPlex high-performance multiplexers are
designed to eliminate the need for additional base station antennas and reduce infrastructure
costs. Relative to competing technologies, these products offer increased transmit power delivered
to the base station antenna, higher sensitivity to subscriber handset signals, and fast and
cost-effective network overlays.
We currently sell most of our commercial products directly to wireless network operators in
the United States. Our customers to date include ALLTEL, AT&T, Sprint Nextel, T-Mobile, U.S.
Cellular and Verizon Wireless. We have a concentrated customer base. We plan to expand our customer
base by selling directly to other wireless network operators and manufacturers of base station
equipment, but we cannot assure that this effort will be successful.
We also generate significant revenues from government contracts. We primarily pursue
government research and development contracts which compliment our commercial product development.
We undertake government contract work which has the potential to improve our commercial product
offering. These contracts often yield valuable intellectual property relevant to our commercial
business. We typically own the intellectual property developed under these contracts, and the
Federal Government receives a royalty-free, non-exclusive and nontransferable license to use the
intellectual property for the United States.
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We sell most of our products to a small number of wireless carriers, and their demand for
wireless communications equipment fluctuates dramatically and unpredictably. We expect these trends
to continue and may cause significant fluctuations in our quarterly and annual revenues.
The wireless communications infrastructure equipment market is extremely competitive and is
characterized by rapid technological change, new product development, product obsolescence,
evolving industry standards and price erosion over the life of a product. We face constant
pressures to reduce prices. Consequently, we expect the average selling prices of our products will
continue decreasing over time. We have responded in the past by successfully reducing our product
costs, and expect further cost reductions over the next twelve months. However, we cannot predict
whether our costs will decline at a rate sufficient to keep pace with the competitive pricing
pressures.
We were incorporated in the state of Delaware in 1987. Our principal place of business and
executive offices are located at 460 Ward Drive, Santa Barbara, California 93111. We have undergone
three unique phases of development since our incorporation in 1987. From 1987 to 1996, we focused
primarily on the research and development of HTS technologies. From 1997 to 2001, our second phase,
we made the transition from a research and development firm to a commercial operating company.
During this time we launched our first commercial HTS product, the SuperFilter System, and
concentrated on commercializing HTS technology for the U.S. wireless market. We are now in our
third phase of development. Our Company has evolved from one oriented solely around HTS technology
to one that is committed to providing best-in-class link enhancement solutions to the global
wireless infrastructure market. Following our strategy of Total Link Enhancement, (simultaneously
optimizing the performance of the uplink, the downlink and the antenna), we now offer innovative
technologies across multiple product lines and in multiple geographic markets.
The Securities We May Offer
With this prospectus, we may offer common stock, preferred stock and warrants, or any
combination of the foregoing. The aggregate initial offering price of all securities we sell in the
primary offerings under this prospectus will not exceed $80,000,000. Each time we offer securities
with this prospectus, we will provide offerees with a prospectus supplement that will contain the
specific terms of the securities being offered. The following is a summary of the securities we may
offer with this prospectus.
We may sell the securities to or through underwriters, dealers or agents or directly to
purchasers. We, as well as any agents acting on our behalf, reserve the sole right to accept and to
reject in whole or in part any proposed purchase of securities. Each prospectus supplement will set
forth the names of any underwriters, dealers or agents involved in the sale of securities described
in that prospectus supplement and any applicable fee, commission or discount arrangements with
them.
Common Stock
We may offer shares of our common stock, par value $0.001 per share, either alone or
underlying other registered securities convertible into or exchangeable for our common stock.
Holders of our common stock are entitled to such dividends as our board of directors may declare
from time to time out of legally available funds, subject to the preferential rights of the holders
of any shares of our preferred stock that are outstanding or that we may issue in the future.
Currently, we do not pay any dividends. Each holder of our common stock is entitled to one vote per
share. Holders of our common stock have no preemptive rights. In this prospectus, we provide a
general description of, among other things, our dividend policy and the transfer and voting
restrictions that apply to holders of our common stock.
Preferred Stock
We may issue shares of preferred stock in one or more classes or series. Our board of
directors or a committee designated by our board of directors will determine the dividend, voting
and conversion rights and other provisions at the time of sale. The particular terms of each class
or series of preferred stock, including redemption privileges, liquidation preferences, voting
rights, dividend rights and/or conversion rights, will be more fully described in the applicable
prospectus supplement relating to the preferred stock offered thereby.
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Warrants
We may offer warrants for the purchase of shares of preferred or common stock. We may issue
the warrants by themselves or together with preferred stock or common stock and the warrants may be
attached to or separate from any offered securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between us and a warrant agent. Our board of
directors or a committee designated by our board of directors will determine the terms of the
warrants at the time of sale. This prospectus contains only general terms and provisions of the
warrants. The applicable prospectus supplement will describe the particular terms of the warrants
being offered thereby.
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement, we anticipate that the net
proceeds from the sale of the securities under this prospectus will be used for general corporate
purposes. General corporate purposes may include repayment of debt, capital expenditures, and any
other purposes that we may specify in any prospectus supplement. 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 the securities. We may
invest the net proceeds temporarily until we use them for their stated purpose.
RATIO OF EARNINGS TO FIXED CHARGES
We will disclose or incorporate by reference in the related prospectus supplement a ratio of
earnings to fixed charges in connection with our registration of debt securities and a ratio of
combined fixed charges and preference dividends to earnings in connection with our registration of
preference equity securities.
DESCRIPTION OF CAPITAL STOCK
The following description of our common stock and preferred stock, together with the
additional information we include in any applicable prospectus supplement, summarizes the material
terms and provisions of the common stock and the preferred stock that we may offer pursuant to this
prospectus. While the terms we have summarized below will apply generally to any future common
stock or preferred stock that we may offer, we will describe the particular terms of any class or
series of these securities in more detail in the applicable prospectus supplement. For the complete
terms of our common stock and preferred stock, please refer to our restated certificate of
incorporation, as amended, or our certificate of incorporation, and our restated bylaws or our
bylaws, which are exhibits to this registration statement of which this prospectus is a part. The
terms of these securities may also be affected by the General Corporation Law of the State of
Delaware. The summary below and that contained in any prospectus supplement is qualified in its
entirety by reference to our certificate of incorporation and our bylaws, as either may be amended
from time to time after the date of this prospectus, but before the date of any such prospectus
supplement.
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. As of February 1, 2008, we
had 12,511,414 shares of common stock outstanding and no shares of preferred stock outstanding,
although we expect to issue during February 2008 an additional 3,101,361 shares of common stock and
611,523 shares of Series A Preferred Stock. The 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
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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
holders 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, and the
shares of common stock issued upon the conversion of any securities convertible into our common
stock will be, fully paid and non-assessable. The shares of common stock offered by this prospectus
or upon the conversion of any preferred stock or debt securities or exercise of any warrants
offered pursuant to this prospectus, when issued and paid for, will also be, fully paid and
non-assessable.
Our common stock is listed on the NASDAQ Stock Market under the symbol SCON. Registrar &
Transfer Company is the transfer agent and registrar for our common stock. 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. As further described below, on
October 23, 2007, our board of directors authorized the designation and issuance of 706,829 shares
of Series A Convertible Preferred Stock. Although it has no present intention to do so, our board
of directors may issue additional preferred stock with terms that could adversely affect the voting
power of the holders of common stock. If we issue preferred stock, it 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 STI or to make removal of management more difficult. Additionally, the
issuance of preferred stock may decrease the market price of our common stock. 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 the
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.
The following description sets forth certain general terms and provisions of the preferred
stock we may issue. If we offer convertible preferred stock, such stock will be convertible into
shares of our common stock. With respect to any convertible preferred stock or preferred stock
(each referred to herein as preferred stock) we may choose to offer, the specific designations and
rights will be described in the prospectus supplement relating to the preferred stock offered,
including the following terms. Each time that we issue a new series of preferred stock, we will
file with the SEC a definitive certificate of designations which will state the designation,
powers, preferences, rights and qualifications, limitations and restrictions of that series of
preferred stock. In addition, the prospectus supplement relating to that new series of preferred
stock will specify the particular amount, price and other terms of that new series. These terms
will include:
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the designation of the series, which may be by distinguishing number, letter or
title; |
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the number of shares of the series, which number the board of directors may
thereafter (except where otherwise provided in the preferred stock designation) increase
or decrease (but not below the number of shares thereof then outstanding); |
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the price at which the preferred stock will be issued; |
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the dividend rate, the dates on which the dividends will be payable, if any,
whether dividends shall be cumulative or noncumulative and other terms relating to the
payment of dividends on the preferred stock; |
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the redemption rights and price or prices, if any, for shares of the series; |
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whether the preferred stock is redeemable or subject to a sinking fund, and the
terms and amount of such sinking fund provided for the purchase or redemption of shares
of the series; |
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the amounts payable on shares of the series, and the special or relative rights of
such shares, in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of our company; |
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whether the shares of the series shall be convertible into shares of any other
class or series, or any other security, of our company or any other corporation, and, if
so, the specification of such other class or series or such other security, the
conversion price or prices or rate or rates, any adjustments thereof, the date or dates
as of which such shares shall be convertible and all other terms and conditions upon
which such conversion may be made; |
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any listing of the preferred stock on any securities exchange; |
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the relative ranking and preferences of the preferred stock as to dividend rights
and rights upon liquidation and dissolution or winding up; |
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restrictions on the issuance of shares of the same series or of any other class or
series; |
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the voting rights, if any, of the holders of shares of the series, provided that no
share of preferred stock of any series will be entitled to more than one vote per share
of preferred stock; and |
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any additional rights, preferences, qualifications, limitations and restrictions of
the preferred stock. |
Any prospectus supplement filed in connection with an offering of preferred stock will
describe all material terms of such series of preferred stock and all material terms of any common
stock, if any, issuable upon conversion of such preferred stock. However, the description of the
terms of the preferred stock to be set forth in an applicable prospectus supplement will not be
complete and will be subject to and qualified in its entirety by reference to the certificate of
amendment to our certificate of incorporation relating to the applicable series of preferred stock,
together with our bylaws. The registration statement of which this prospectus forms a part
currently does or will in the future include the certificate of amendment and our bylaws as
exhibits or incorporate them by reference.
The preferred stock will, if and when issued, be fully paid and non-assessable. The holders of
the preferred stock will not have preemptive rights.
Series A Convertible Preferred Stock
In October 2007 in connection with entering into an amended investment agreement with Hunchun
BaoLi Communication Co. Ltd., or BAOLI, our board of directors authorized the designation and
issuance of 706,829 shares of Series A Convertible Preferred Stock, or Series A Preferred, par
value $0.001. On January 8, 2008, the terms of the investment agreement with BAOLI were amended. We
have received the full purchase price and expect to deliver 3,101,361 shares of common stock and
611,523 shares of Series A Preferred Stock to BAOLI representing all shares to be issued in
connection with the purchase. Subject to the terms and conditions of our Series A Preferred and to
customary adjustments to the conversion rate, each share of our Series A Preferred 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 $.01 per share, each share of Series A
Preferred 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 will not have any voting rights. For
a complete description of the terms of the Series A Preferred, please see the certificate of
designations, a copy of which is available from us or in the Form 8-K we filed with the SEC on
November 15, 2007, which may be viewed on the website maintained by the SEC (www.sec.gov) and which
is incorporated by reference into this prospectus.
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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; |
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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 |
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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 66-2/3% of
the outstanding voting stock that is not owned by the interested stockholder. |
Section 203 defines business combination to include the following:
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any merger or consolidation involving the corporation and the interested
stockholder; |
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any sale, transfer, pledge or other disposition of 10% or more of the assets of the
corporation involving the interested stockholder; |
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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; |
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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 |
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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
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.
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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.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of preferred stock or common stock. Warrants may be
issued independently or together with preferred stock or common stock and may be attached to or
separate from any offered securities. Each series of warrants will be issued under a separate
warrant agreement to be entered into between us and a warrant agent. The warrant agreement may
provide that, in certain circumstances, we and the warrant agent will be permitted to amend the
warrant agreement without the consent of the holders of warrants. The warrant agent will act solely
as our agent in connection with the warrants and will not assume any obligation or relationship of
agency or trust for or with any registered holders of warrants or beneficial owners of warrants.
This summary of certain provisions of the warrants is not complete. You should refer to the warrant
agreement, including the forms of warrant certificate representing the warrants, relating to the
specific warrants being offered for the complete terms of the warrant agreement and the warrants.
The warrant agreement, together with the terms of warrant certificate and warrants, will be filed
with the SEC in connection with the offering of the specific warrants.
The particular terms of any issue of warrants will be described in the prospectus supplement
relating to the issue. Those terms may include:
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the title of such warrants; |
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the aggregate number of such warrants; |
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the price or prices at which such warrants will be issued; |
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the currency or currencies (including composite currencies) in which the price of
such warrants may be payable; |
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the amount and terms of the securities purchasable upon exercise of such warrants
and the procedures and conditions relating to the exercise of such warrants; |
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the purchase price of each of the securities purchasable upon exercise of such
warrants; |
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the date on which the right to exercise such warrants will commence and the date on
which such right shall expire; |
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any provisions for adjustment of the number or amount of securities to be received
upon exercise of the warrants or of the exercise price of the warrants; |
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if applicable, the minimum or maximum amount of such warrants that may be exercised
at any one time; |
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if applicable, the designation and terms of the securities with which such warrants
are issued and the number of such warrants issued with each such security; |
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if applicable, the date on and after which such warrants and the related securities
will be separately transferable; |
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information with respect to book-entry procedures, if any; and |
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any other terms of such warrants, including terms, procedures, conditions and
limitations relating to the exercise of such warrants. |
The prospectus supplement relating to any warrants to purchase equity securities may also
include, if applicable, a discussion of certain U.S. federal income tax and ERISA considerations.
Warrants for the purchase of preferred stock and/or common stock will be offered and
exercisable for U.S. dollars only. Warrants will be issued in registered form only.
Each warrant will entitle its holder to purchase the number of shares of preferred stock or
common stock at the exercise price set forth in, or calculable as set forth in, the applicable
prospectus supplement. The applicable prospectus supplement will also describe the circumstances
pursuant to which the exercise price and/or the number or amount of the securities to be issued
upon exercise of the warrants would be adjusted and the method of making and notifying the holder
of any such adjustment.
After the close of business on the applicable expiration date, unexercised warrants will
become void. We will specify the place or places where, and the manner in which, warrants may be
exercised in the applicable prospectus supplement.
Upon receipt of payment and the warrant certificate properly completed and duly executed at
the corporate trust office of the warrant agent or any other office indicated in the applicable
prospectus supplement, we will, as soon as practicable, issue and deliver the purchased securities
in the manner described in the applicable prospectus supplement. If less than all of the warrants
represented by the warrant certificate are exercised, a new warrant certificate will be issued for
the remaining unexpired warrants.
Prior to the exercise of any warrants to purchase preferred stock or common stock, holders of
the warrants will not have any of the rights of holders of the preferred stock or common stock
purchasable upon exercise, including the right to vote or to receive any payments of dividends on
the preferred stock or common stock purchasable upon exercise.
PLAN OF DISTRIBUTION
We may sell the securities being offered hereby in one or more of the following ways from time
to time:
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through agents to the public or to investors; |
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to underwriters for resale to the public or to investors; |
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directly to investors; or |
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through a combination of any of these methods of sale. |
We will set forth in a prospectus supplement the terms of that particular offering of
securities, including:
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the name or names of any agents or underwriters; |
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the purchase price of the securities being offered and the proceeds we will receive
from the sale; |
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any over-allotment options under which underwriters may purchase additional
securities from us; |
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any agency fees or underwriting discounts and other items constituting agents or
underwriters compensation; |
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any initial public offering price; |
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any discounts or concessions allowed or reallowed or paid to dealers; and |
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any securities exchanges or markets on which such securities may be listed. |
We have been advised by the Financial Industry Regulatory Authority, or FINRA, that the
maximum commission or discount to be received by any FINRA member or independent broker-dealer in
connection with any sales of securities being offered hereby is 8%.
Agents
We may designate agents who agree to use their reasonable efforts to solicit purchases of our
securities for the period of their appointment or to sell our securities on a continuing basis.
Underwriters
If we use underwriters for a sale of securities, the underwriters will acquire the securities
for their own account. The underwriters may resell the securities in one or more transactions,
including negotiated transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The obligations of the underwriters to purchase the securities will be subject
to the conditions set forth in the applicable underwriting agreement. The underwriters will be
obligated to purchase all the securities of the series offered if they purchase any of the
securities of that series. We may change from time to time any initial public offering price and
any discounts or concessions the underwriters allow or reallow or pay to dealers.
Direct Sales
We may also sell securities directly to one or more purchasers without using underwriters or
agents. Underwriters, dealers and agents that participate in the distribution of the securities may
be underwriters as defined in the Securities Act, and any discounts or commissions they receive
from us and any profit on their resale of the securities may be treated as underwriting discounts
and commissions under the Securities Act. To the extent known to us, we will identify in the
applicable prospectus supplement any underwriters, dealers or agents and will describe their
compensation.
Derivative Securities
We may enter into derivative transactions with third parties, or sell securities not covered
by this prospectus to third parties in privately negotiated transactions. If the applicable
prospectus supplement indicates, in connection with those derivatives, the third parties may sell
securities covered by this prospectus and the applicable prospectus supplement, including in short
sale transactions. If so, the third party may use securities pledged by us or borrowed from us or
others to settle those sales or to close out any related open borrowings of stock, and may use
securities received from us in settlement of those derivatives to close out any related open
borrowings of stock. The third party in such sale transactions will be an underwriter and will be
identified in the applicable prospectus supplement (or a post-effective amendment).
Trading Markets and Listing of Securities
Unless otherwise specified in the applicable prospectus supplement, each class or series of
securities will be a new issue with no established trading market, other than our common stock,
which is listed on the Nasdaq Stock Market. We may elect to list any other class or series of
securities on any exchange or market, but we are not obligated to do so. It is possible that one or
more underwriters may make a market in a class or series of securities, but the underwriters will
not be obligated to do so and may discontinue any market making at any time without notice. We
cannot give any assurance as to the liquidity of the trading market for any of the securities.
Stabilization Activities
Any underwriter may engage in overallotment, stabilizing transactions, short covering
transactions and penalty bids in accordance with Regulation M under the Exchange Act. Overallotment
involves sales in excess of the offering size, which create a short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the stabilizing bids do not
exceed a specified maximum. Short covering transactions involve purchases of the securities in the
open market after the distribution is completed to cover short positions. Penalty bids permit the
underwriters to reclaim a selling concession from a dealer when the securities originally sold by
the
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dealer are purchased in a covering transaction to cover short positions. Those activities may
cause the price of the securities to be higher than it would otherwise be. If commenced, the
underwriters may discontinue any of these activities at any time.
Passive Market Making
Any underwriters who are qualified market makers on the NASDAQ Stock Market may engage in
passive market making transactions in the securities on the Nasdaq Stock Market in accordance with
Rule 103 of Regulation M, during the business day prior to the pricing of the offering, before the
commencement of offers or sales of the securities. Passive market makers must comply with
applicable volume and price limitations and must be identified as passive market makers. In
general, a passive market maker must display its bid at a price not in excess of the highest
independent bid for such security. If all independent bids are lowered below the passive market
makers bid, however, the passive market makers bid must then be lowered when certain purchase
limits are exceeded.
Material Relationships
We may use underwriters, dealers and agents with whom we have a material relationship. To the
extent required, we will describe the nature of any such relationship in any prospectus supplement
naming any such underwriter, dealer or agent. Underwriters, dealers and agents may engage in
transactions with or perform services for us in the ordinary course of their businesses, and we
will include in any prospectus supplement any required disclosure related to such transactions or
services. We may have agreements with the underwriters, dealers and agents to indemnify them
against specified civil liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters relating to the validity of the common stock, preferred stock and
warrants offered by this prospectus will be passed upon for us by Manatt, Phelps & Phillips, LLP,
Los Angeles, California.
EXPERTS
The financial statements of Superconductor Technologies Inc., as of December 31, 2006 and for
the year then ended, incorporated in this prospectus by reference to the Annual Report on Form 10-K
of Superconductor Technologies Inc. for the year ended December 31, 2006 have been so incorporated
in reliance on the report (which contains an explanatory paragraph related to our ability to
continue as a going concern) of Stonefield Josephson, independent registered public accounting
firm, given on the authority of said firm as experts in auditing and accounting.
The financial statements of Superconductor Technologies Inc., as of December 31, 2005 and for
the years ended December 31, 2005 and 2004, incorporated in this Prospectus by reference to the
Annual Report on Form 10-K of Superconductor Technologies Inc. for the year ended December 31, 2006
have been so incorporated in reliance on the report (which contains an explanatory paragraph
related to our ability to continue as a going concern as described in note 2 to the financial
statements) of PricewaterhouseCoopers LLP, independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting. In connection with this
Registration Statement on Form S-3, we have engaged our prior independent registered public
accounting firm, PricewaterhouseCoopers LLP, and in connection therewith, agreed to indemnify
PricewaterhouseCoopers LLP for payment of all legal costs and expenses incurred in
PricewaterhouseCoopers LLPs successful defense of any legal action or proceeding that arises as a
result of inclusion of PricewaterhouseCoopers LLPs audit report on our past financial statements.
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3,752,005 Shares
PROSPECTUS SUPPLEMENT
MDB CAPITAL GROUP LLC
June 22, 2009