##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 26, 2009
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 0-21074
 SUPERCONDUCTOR TECHNOLOGIES INC.
  Delaware
    
    77-0158076(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer
Identification No.)
 460 Ward Drive,
Santa Barbara, California 93111-2356
 (805) 690-4500
 þ o
 o o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-accelerated Filer o
    
    Smaller reporting company þ(do not check if a smaller reporting company)
 o þ




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##### 



SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
    
    
    1PART I  FINANCIAL INFORMATIONITEM 1. Financial StatementsCondensed Consolidated Statements of Operations
    
    
    2Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Cash Flows
    
    
    4Notes to Unaudited Interim Condensed Consolidated Financial Statements.
    
    
    5ITEM 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    16ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    22ITEM 4T. Controls and Procedures
    
    
    22PART II  OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    22ITEM 1A. Risk Factors
    
    
    22ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22ITEM 3. Defaults Upon Senior Securities
    
    
    23ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    23ITEM 5. Other Information
    
    
    23ITEM 6. Exhibits
    
    
    23SIGNATURE
    
    
    24EX-31.1EX-31.2EX-32.1EX-32.2
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##### Table of Contents



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 This Report contains 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. We claim the protection of the safe harbor contained in the Private Securities Litigation
Reform Act of 1995 for these forward looking statements. 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 the adequacy of our funding. Other statements contained in this
Report 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.
 We caution investors that any forward-looking statements presented in this Report, or that 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 cash 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;
    
    fluctuations in product demand from quarter to quarter can be significant;
    
    the impact of competitive filter products, technologies and pricing;
    
    manufacturing capacity constraints and difficulties; and
    
    general economic conditions.
 For further discussion of these and other factors see, Managements Discussion and Analysis
of Financial Condition and Results of Operations and Risk Factors in our Annual Report on Form
10-K for 2008.
 This Report 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 to our forward-looking statements to reflect events or
circumstances after the date of this Report.
 1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 SUPERCONDUCTOR TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Nine Months EndedSeptember 26,
    
    
    September 27,
    
    
    September 26,
    
    
    September 27,2009
    
    
    2008
    
    
    2009
    
    
    2008Net revenues:Net commercial product revenues
    
    $
    2,985,000
    
    
    $
    2,741,000
    
    
    $
    5,893,000
    
    
    $
    6,082,000Government and other contract revenues
    
    
    1,307,000
    
    
    
    854,000
    
    
    
    2,708,000
    
    
    
    3,933,000Total net revenues
    
    
    4,292,000
    
    
    
    3,595,000
    
    
    
    8,601,000
    
    
    
    10,015,000Costs and expenses:Cost of commercial product revenue
    
    
    2,947,000
    
    
    
    3,078,000
    
    
    
    7,186,000
    
    
    
    7,252,000Cost of government and other contracts
    
    
    993,000
    
    
    
    709,000
    
    
    
    2,227,000
    
    
    
    3,198,000Research and development
    
    
    902,000
    
    
    
    1,006,000
    
    
    
    2,984,000
    
    
    
    2,156,000Selling, general and administrative
    
    
    1,629,000
    
    
    
    2,096,000
    
    
    
    5,164,000
    
    
    
    6,513,000Total costs and expenses
    
    
    6,471,000
    
    
    
    6,889,000
    
    
    
    17,561,000
    
    
    
    19,119,000Loss from operations
    
    
    (2,179,000
    )
    
    
    (3,294,000
    )
    
    
    (8,960,000
    )
    
    
    (9,104,000
    )Other Income and ExpenseNoncontrolling interest in joint venture
    
    
    (30,000
    )
    
    
    
    
    
    
    (117,000
    )
    
    
    Adjustments to fair value of derivatives
    
    
    393,000
    
    
    
    
    
    
    
    (387,000
    )
    
    
    Interest income
    
    
    4,000
    
    
    
    66,000
    
    
    
    21,000
    
    
    
    235,000Interest expense
    
    
    (7,000
    )
    
    
    (7,000
    )
    
    
    (25,000
    )
    
    
    (23,000
    )Net loss
    
    $
    (1,819,000
    )
    
    $
    (3,235,000
    )
    
    $
    (9,468,000
    )
    
    $
    (8,892,000
    )Basic and diluted loss per common share
    
    $
    (0.08
    )
    
    $
    (0.18
    )
    
    $
    (0.50
    )
    
    $
    (0.56
    )Weighted average number of common
shares outstanding
    
    
    21,621,035
    
    
    
    17,750,761
    
    
    
    19,116,136
    
    
    
    15,908,298
  2




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SUPERCONDUCTOR TECHNOLOGIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 September 26,
    
    
    December 31,2009
    
    
    2008(Unaudited)
    
    
    (See Note)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    12,716,000
    
    
    $
    7,569,000Accounts receivable, net
    
    
    1,025,000
    
    
    
    355,000Inventory, net
    
    
    3,062,000
    
    
    
    5,278,000Prepaid expenses and other current assets
    
    
    825,000
    
    
    
    416,000Total Current Assets
    
    
    17,628,000
    
    
    
    13,618,000Property and equipment, net of accumulated depreciation of
$20,833,000 and $19,943,000, respectively
    
    
    2,032,000
    
    
    
    2,739,000Patents, licenses and purchased technology, net of accumulated amortization
of $2,308,000 and $2,055,000, respectively
    
    
    2,122,000
    
    
    
    2,252,000Investment in joint venture
    
    
    412,000
    
    
    
    521,000Other assets
    
    
    221,000
    
    
    
    228,000Total Assets
    
    $
    22,415,000
    
    
    $
    19,358,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    951,000
    
    
    $
    707,000Accrued expenses
    
    
    1,118,000
    
    
    
    578,000Fair value of warrant derivative
    
    
    387,000
    
    
    
    Current portion of capitalized lease obligations and long term debt
    
    
    56,000
    
    
    
    80,000Total Current Liabilities
    
    
    2,512,000
    
    
    
    1,365,000Other long term liabilities
    
    
    519,000
    
    
    
    441,000Total Liabilities
    
    
    3,031,000
    
    
    
    1,806,000Commitments and contingencies-Notes 6 and 7Stockholders Equity:Preferred stock, $.001 par value, 2,000,000 shares authorized,
611,523 shares issued and outstanding
    
    
    1,000
    
    
    
    1,000Common stock, $.001 par value, 250,000,000 shares authorized,
22,512,033 and 17,869,030 shares issued and outstanding, respectively
    
    
    23,000
    
    
    
    18,000Capital in excess of par value
    
    
    241,514,000
    
    
    
    230,219,000Accumulated deficit
    
    
    (222,154,000
    )
    
    
    (212,686,000
    )Total Stockholders Equity
    
    
    19,384,000
    
    
    
    17,552,000Total Liabilities and Equity
    
    $
    22,415,000
    
    
    $
    19,358,000
   3




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##### Table of Contents



SUPERCONDUCTOR TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine Months EndedSeptember 26,
    
    
    September 27,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (9,468,000
    )
    
    $
    (8,892,000
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    1,143,000
    
    
    
    1,313,000Stock-based compensation expense
    
    
    843,000
    
    
    
    452,000Provision for excess and obsolete inventories
    
    
    192,000
    
    
    
    Noncontrolling interest in joint venture
    
    
    117,000
    
    
    
    Fair value of derivatives
    
    
    387,000
    
    
    
    Changes in assets and liabilities:Accounts receivable
    
    
    (670,000
    )
    
    
    1,003,000Inventory
    
    
    2,024,000
    
    
    
    (1,699,000
    )Prepaid expenses and other current assets
    
    
    (710,000
    )
    
    
    75,000Patents, licenses and purchased technology
    
    
    (123,000
    )
    
    
    (252,000
    )Other assets
    
    
    309,000
    
    
    
    (24,000
    )Accounts payable, accrued expenses and other long-
term liabilities
    
    
    838,000
    
    
    
    (1,006,000
    )Net cash used in operating activities
    
    
    (5,118,000
    )
    
    
    (9,030,000
    )CASH FLOWS FROM INVESTING ACTIVITIES:Investment in joint venture
    
    
    (8,000
    )
    
    
    (521,000
    )Purchases of property and equipment
    
    
    (183,000
    )
    
    
    (126,000
    )Net cash used in investing activities
    
    
    (191,000
    )
    
    
    (647,000
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from shares to be issued
    
    
    
    
    
    
    (4,000,000
    )Net proceeds from the sale of common stock
    
    
    10,456,000
    
    
    
    20,449,000Net cash provided by financing activities
    
    
    10,456,000
    
    
    
    16,449,000Net increase in cash and cash equivalents
    
    
    5,147,000
    
    
    
    6,772,000Cash and cash equivalents at beginning of period
    
    
    7,569,000
    
    
    
    3,939,000Cash and cash equivalents at end of period
    
    $
    12,716,000
    
    
    $
    10,711,000
  4




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SUPERCONDUCTOR TECHNOLOGIES INC.
 
 NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. General
  ® ®
    2. Summary of Significant Accounting Policies
 Basis of Presentation
    5




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Principles of Consolidation
  Cash and Cash Equivalents
  Accounts Receivable
  Revenue Recognition
    Shipping and Handling Fees and Costs
  Warranties
  Guarantees
  6




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Research and Development Costs
  Inventories
  Property and Equipment
  Patents, Licenses and Purchased Technology
  Long-Lived Assets
   Other Investments
  7




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##### Table of Contents



Loss Contingencies
  Income Taxes
 Income Taxes
 Marketing Costs
  Net Loss Per Share
  Stock-based Compensation
   8




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##### Table of Contents



Three months ended
    
    
    Nine months endedSeptember 26,
    
    
    September 27,
    
    
    September 26,
    
    
    September 27,2009
    
    
    2008
    
    
    2009
    
    
    2008Cost of revenue
    
    $
    8,000
    
    
    $
    5,000
    
    
    $
    23,000
    
    
    $
    17,000Research and development
    
    
    67,000
    
    
    
    31,000
    
    
    
    200,000
    
    
    
    93,000Selling, general and administrative
    
    
    224,000
    
    
    
    114,000
    
    
    
    620,000
    
    
    
    342,000Total stock-based compensation expense
    
    $
    299,000
    
    
    $
    150,000
    
    
    $
    843,000
    
    
    $
    452,000
 Use of Estimates
  Fair Value of Financial Instruments
  Derivatives and Hedging See Note 4 Warrants
 Comprehensive Income (Loss)
  Segment Information
  Certain Risks and Uncertainties
   9




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##### Table of Contents



Recent Accounting Pronouncements
      3. Short Term Borrowings
   10




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##### Table of Contents



4. Stockholders Equity
  Convertible
    
    
    
    
    
    
    
    
    
    Capital inPreferred Stock
    
    Common Stock
    
    Excess of
    
    AccumulatedShares
    
    Amount
    
    Shares
    
    Amount
    
    Par Value
    
    Deficit
    
    TotalBalance at December 31, 2008
    
    
    611,523
    
    
    $
    1,000
    
    
    
    17,869,030
    
    
    $
    18,000
    
    
    $
    230,219,000
    
    
    $
    (212,686,000
    )
    
    $
    17,552,000Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    3,752,005
    
    
    
    4,000
    
    
    
    10,452,000
    
    
    
    
    
    
    
    10,456,000Issuance of awards and
stock-based compensation
    
    
    
    
    
    
    
    
    
    
    890,998
    
    
    
    1,000
    
    
    
    843,000
    
    
    
    
    
    
    
    844,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,468,000
    )
    
    
    (9,468,000
    )Balance at September 26, 2009
    
    
    611,523
    
    
    $
    1,000
    
    
    
    22,512,033
    
    
    $
    23,000
    
    
    $
    241,514,000
    
    
    $
    (222,154,000
    )
    
    $
    19,384,000
 Common Stock
  Equity Awards
   The following is a summary of stock option transactions under our equity award plans during
the first nine months of 2009:
 Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    Number of
    
    
    AverageNumber of
    
    
    
    
    
    
    Exercise
    
    
    Options
    
    
    ExerciseShares
    
    
    Price Per Share
    
    
    Price
    
    
    Exercisable
    
    
    PriceBalance at December 31, 2008
    
    
    1,234,025
    
    
    $
    1.43-$493.75
    
    
    $
    22.18
    
    
    
    674,061
    
    
    $
    36.67Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    Canceled
    
    
    (76,889
    )
    
    $
    6.10-$471.25
    
    
    $
    42.54Balance at September 26, 2009
    
    
    1,157,136
    
    
    $
    1.43-$493.75
    
    
    $
    20.83
    
    
    
    932,722
    
    
    $
    24.74
    11




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##### Table of Contents



Warrants
  Common SharesTotal and
    
    PriceCurrently
    
    perExercisable
    
    Share
    
    Expiration DateWarrants related to
the issuance of
common stock
    
    
    608,237
    
    
    
    6.25
    
    
    August 16, 2010*
        
    *
    *Warrants related to
April 2004 Bridge
Loans
    
    
    10,000
    
    
    
    18.50
    
    
    April 28, 2011*Total
    
    
    618,237
 
 *
    
    The terms of these warrants contain net exercise provisions, under which holders can elect
to receive common stock equal to the difference between the exercise price and the sale
price for common shares on the exercise date or the date immediately preceding the exercise
date instead of paying the exercise price in cash.**
    
    These warrants contain special anti-dilution adjustment provisions relating to the price
of other issuances.  5. Earnings Per Share
 Earnings per Share
  September 26,
    
    September 27,2009
    
    2008Outstanding stock options
    
    
    1,157,136
    
    
    
    1,275,964Unvested restricted stock awards
    
    
    910,998
    
    
    
    20,000Outstanding warrants
    
    
    618,237
    
    
    
    352,466Total
    
    
    2,686,371
    
    
    
    1,648,430
 6. Commitments and Contingencies
 Operating Leases
  12




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Patents and Licenses
   Year ending December 31,
    
    Licenses
    
    
    Operating LeasesRemainder of 2009
    
    $
    150,000
    
    
    $
    328,0002010
    
    
    175,000
    
    
    
    1,333,0002011
    
    
    175,000
    
    
    
    1,364,0002012
    
    
    175,000
    
    
    
    1,396,0002013
    
    
    175,000
    
    
    
    1,429,000Thereafter
    
    
    1,110,000
    
    
    
    4,413,000Total payments
    
    $
    1,960,000
    
    
    $
    10,263,000
 7. Contractual Guarantees and Indemnities
  Warranties
  Intellectual Property Indemnities
  Director and Officer Indemnities and Contractual Guarantees
   13




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##### Table of Contents



General Contractual Indemnities/Products Liability
  Short Term Borrowings
 See Note
3Short Term Borrowings.
 Contractual Contingency
  8. Details of Certain Financial Statement Components and Supplemental Disclosures of Cash Flow
Information and Non-Cash Activities
 Balance Sheet Data
 September 26,
    
    
    December 31,2009
    
    
    2008Accounts receivable:Accounts receivable-trade
    
    $
    291,000
    
    
    $
    110,000United States government accounts
receivable-billed
    
    
    751,000
    
    
    
    320,000Less: allowance for doubtful
accounts
    
    
    (17,000
    )
    
    
    (75,000
    )$
    1,025,000
    
    
    $
    355,000
 September 26,
    
    
    December 31,2009
    
    
    2008Inventories:Raw materials
    
    $
    2,075,000
    
    
    $
    2,753,000Work-in-process
    
    
    796,000
    
    
    
    1,038,000Finished goods
    
    
    995,000
    
    
    
    2,348,000Less inventory
reserve
    
    
    (804,000
    )
    
    
    (861,000
    )$
    3,062,000
    
    
    $
    5,278,000
 September 26,
    
    
    December 31,2009
    
    
    2008Property and Equipment:Equipment
    
    $
    15,706,000
    
    
    $
    15,537,000Leasehold improvements
    
    
    6,755,000
    
    
    
    6,741,000Furniture and fixtures
    
    
    404,000
    
    
    
    404,00022,865,000
    
    
    
    22,682,000Less: accumulated depreciation and
amortization
    
    
    (20,833,000
    )
    
    
    (19,943,000
    )$
    2,032,000
    
    
    $
    2,739,000
 14




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##### Table of Contents



September 26,
    
    
    December 31,2009
    
    
    2008Patents and Licenses:Patents pending
    
    $
    1,039,000
    
    
    $
    940,000Patents issued
    
    
    1,109,000
    
    
    
    1,059,000Less accumulated amortization
    
    
    (459,000
    )
    
    
    (409,000
    )Net patents issued
    
    
    650,000
    
    
    
    650,000Licenses Pending
    
    
    13,000
    
    
    
    39,000Licenses Issued
    
    
    563,000
    
    
    
    563,000Less accumulated amortization
    
    
    (192,000
    )
    
    
    (167,000
    )Net licenses Issued
    
    
    371,000
    
    
    
    396,000Purchased technology
    
    
    1,706,000
    
    
    
    1,706,000Less accumulated amortization
    
    
    (1,657,000
    )
    
    
    (1,479,000
    )Net purchased technology
    
    
    49,000
    
    
    
    227,000$
    2,122,000
    
    
    $
    2,252,000
  September 26,
    
    
    December 31,2009
    
    
    2008Accrued Expenses and Other Long Term
Liabilities:Salaries payable
    
    $
    164,000
    
    
    $
    12,000Compensated absences
    
    
    419,000
    
    
    
    375,000Compensation related
    
    
    111,000
    
    
    
    12,000Warranty reserve
    
    
    277,000
    
    
    
    261,000Deferred rent
    
    
    368,000
    
    
    
    325,000Fair value of warrant
derivative
    
    
    387,000
    
    
    
    Other
    
    
    354,000
    
    
    
    114,0002,080,000
    
    
    
    1,099,000Less current portion
    
    
    (1,561,000
    )
    
    
    (658,000
    )Long term portion
    
    $
    519,000
    
    
    $
    441,000
 For the nine months ended,September 26,
    
    
    September 27,2009
    
    
    2008Warranty Reserve Activity:Beginning balance
    
    $
    262,000
    
    
    $
    380,000Additions
    
    
    21,000
    
    
    
    37,000Deductions
    
    
    (6,000
    )
    
    
    (107,000
    )Ending balance
    
    $
    277,000
    
    
    $
    310,000
 15




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##### Table of Contents



9. Subsequent Events
  
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
 General
  Our Proprietary Technology
  
    
    8 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.
    
    30 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.
    
    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.
    
    3 patents covering other superconducting technologies, which expire between 2013
and 2015.
   
    
    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.
    
    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 Energys Los
Alamos National Laboratory (LANL) to apply our HTS expertise to LANLs 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.
    
    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.
governments 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.
 Risk Factors
 Our Business Model
  Government Contracts
  Commercial Applications
  
    
    SuperLink, a highly compact and reliable receiver front-end HTS wireless
filter system to eliminate out-of-band interference for wireless base stations,
combining filters with a proprietary cryogenic cooler and a cooled low-noise
amplifier.
    
    AmpLink, a ground-mounted unit for wireless base stations that includes a
high-performance amplifier and up to six dual duplexers.
    
    SuperPlex, a high-performance multiplexer that provides extremely low
insertion loss and excellent cross-band isolation designed to eliminate the need for
additional base station antennas and reduce infrastructure costs.
 Risk Factors
 Joint Ventures
  17




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Risk Factors
 Licenses
  Backlog
  Results of Operations
 Quarter and nine months ended September 26, 2009 compared to the quarter and nine months ended
September 27, 2008
      18




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Dollars in thousands
    
    Three Months Ended
    
    
    Nine Months EndedSeptember 26, 2009
    
    
    September 27, 2008
    
    
    September 26, 2009
    
    
    September 27, 2008Net commercial product sales
    
    $
    2,985
    
    
    
    100
    %
    
    $
    2,741
    
    
    
    100
    %
    
    $
    5,893
    
    
    
    100
    %
    
    $
    6,082
    
    
    
    100
    %Cost of commercial product sales
    
    
    2,947
    
    
    
    99
    %
    
    
    3,078
    
    
    
    112
    %
    
    
    7,186
    
    
    
    122
    %
    
    
    7,252
    
    
    
    119
    %Gross profit
    
    $
    38
    
    
    
    1
    %
    
    $
    (337
    )
    
    
    (12
    )%
    
    $
    (1,293
    )
    
    
    (22
    )%
    
    $
    (1,170
    )
    
    
    (19
    )%
        19




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Liquidity and Capital Resources
 Cash Flow Analysis
     Financing Activities
    Contractual Obligations and Commercial Commitments
  Capital Expenditures
  Future Liquidity
  20




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Net Operating Loss Carryforward
    Critical Accounting Policies and Estimates
   Recent Accounting Pronouncements
  21




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Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
 Managements Discussion
and Analysis of Financial Condition and Results of Operations  Market Risk
 
 Item 4T.
    
    Controls and Procedures.
    
 PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings.
  
 Item 1A.
    
    Risk Factors.
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
  22




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##### Table of Contents



Item 3.
    
    Defaults Upon Senior Securities.
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders.
  
 Item 5.
    
    Other Information.
  
 Item 6.
    
    Exhibits.
 Number
    
    Description of Document31.1
    
    Statement of CEO Pursuant to 302 of the Sarbanes-Oxley Act of 2002*31.2
    
    Statement of CFO Pursuant to 302 of the Sarbanes-Oxley Act of 2002*32.1
    
    Statement of CEO Pursuant to 906 of the Sarbanes-Oxley Act of 2002*32.2
    
    Statement of CFO Pursuant to 906 of the Sarbanes-Oxley Act of 2002*
 
 *
    
    Filed herewith. 23




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SIGNATURES
  SUPERCONDUCTOR TECHNOLOGIES INC.Dated:  November 10, 2009
    /s/ William J. BuchananWilliam J. BuchananController (Principal Financial and Accounting Officer)/s/ Jeffrey A. QuiramJeffrey A. QuiramPresident and Chief Executive Officer 24