##### 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 June 27, 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
(State or other jurisdiction of 
incorporation or organization)
    
    77-0158076
(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 Statements
    
    
2Condensed Consolidated Statement of Operations
    
    
    2Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statement 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
    
    
    23ITEM 4T. Controls and Procedures
    
    
    23PART II  OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    23ITEM 1A. Risk Factors
    
    
    23ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23ITEM 3. Defaults Upon Senior Securities
    
    
    23ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    23ITEM 5. Other Information
    
    
    24ITEM 6. Exhibits
    
    
    24SIGNATURE
    
    
    25EX-31.1EX-31.2EX-32.1EX-32.2
  i




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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
    
    
    Six Months EndedJune 27, 2009
    
    
    June 28, 2008
    
    
    June 27, 2009
    
    
    June 28, 2008Net revenues:Net commercial product revenues
    
    $
    1,777,000
    
    
    $
    1,348,000
    
    
    $
    2,908,000
    
    
    $
    3,341,000Government and other contract revenues
    
    
    854,000
    
    
    
    1,601,000
    
    
    
    1,400,000
    
    
    
    3,080,000Total net revenues
    
    
    2,631,000
    
    
    
    2,949,000
    
    
    
    4,308,000
    
    
    
    6,421,000Costs and expenses:Cost of commercial product revenues
    
    
    2,441,000
    
    
    
    2,155,000
    
    
    
    4,239,000
    
    
    
    4,173,000Contract research and development
    
    
    665,000
    
    
    
    1,247,000
    
    
    
    1,234,000
    
    
    
    2,489,000Other research and development
    
    
    999,000
    
    
    
    743,000
    
    
    
    2,082,000
    
    
    
    1,151,000Selling, general and administrative
    
    
    1,812,000
    
    
    
    2,215,000
    
    
    
    3,535,000
    
    
    
    4,416,000Total costs and expenses
    
    
    5,917,000
    
    
    
    6,360,000
    
    
    
    11,090,000
    
    
    
    12,229,000Loss from operations
    
    
    (3,286,000
    )
    
    
    (3,411,000
    )
    
    
    (6,782,000
    )
    
    
    (5,808,000
    )Other Income and ExpenseNoncontrolling interest in joint venture
    
    
    (37,000
    )
    
    
    
    
    
    
    (87,000
    )
    
    
    Adjustments to fair value of derivatives
    
    
    (780,000
    )
    
    
    
    
    
    
    (780,000
    )
    
    
    Interest income
    
    
    4,000
    
    
    
    70,000
    
    
    
    17,000
    
    
    
    169,000Interest expense
    
    
    (9,000
    )
    
    
    (8,000
    )
    
    
    (18,000
    )
    
    
    (17,000
    )Net loss
    
    $
    (4,108,000
    )
    
    $
    (3,349,000
    )
    
    $
    (7,650,000
    )
    
    $
    (5,656,000
    )Basic and diluted loss per common share
    
    $
    (0.23
    )
    
    $
    (0.21
    )
    
    $
    (0.43
    )
    
    $
    (0.38
    )Weighted average number of common
shares outstanding
    
    
    18,170,470
    
    
    
    16,316,072
    
    
    
    17,904,975
    
    
    
    14,976,078
  2




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SUPERCONDUCTOR TECHNOLOGIES INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 27,
    
    
    December 31,2009
    
    
    2008(Unaudited)
    
    
    (See Note)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    13,225,000
    
    
    $
    7,569,000Accounts receivable, net
    
    
    959,000
    
    
    
    355,000Inventory, net
    
    
    4,265,000
    
    
    
    5,278,000Prepaid expenses and other current assets
    
    
    697,000
    
    
    
    416,000Total Current Assets
    
    
    19,146,000
    
    
    
    13,618,000Property and equipment, net of accumulated depreciation of
$20,560,000 and $19,943,000, respectively
    
    
    2,254,000
    
    
    
    2,739,000Patents, licenses and purchased technology, net of accumulated amortization
of $2,223,000 and $2,055,000, respectively
    
    
    2,149,000
    
    
    
    2,252,000Investment in joint venture
    
    
    422,000
    
    
    
    521,000Other assets
    
    
    221,000
    
    
    
    228,000Total Assets
    
    $
    24,192,000
    
    
    $
    19,358,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    962,000
    
    
    $
    707,000Accrued expenses
    
    
    1,001,000
    
    
    
    578,000Fair value of warrant derivative
    
    
    780,000
    
    
    
    Current portion of capitalized lease obligations and long term debt
    
    
    62,000
    
    
    
    80,000Total Current Liabilities
    
    
    2,805,000
    
    
    
    1,365,000Other long term liabilities
    
    
    485,000
    
    
    
    441,000Total Liabilities
    
    
    3,290,000
    
    
    
    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
    
    
    241,214,000
    
    
    
    230,219,000Accumulated deficit
    
    
    (220,336,000
    )
    
    
    (212,686,000
    )Total Stockholders Equity
    
    
    20,902,000
    
    
    
    17,552,000Total Liabilities and Equity
    
    $
    24,192,000
    
    
    $
    19,358,000
   3




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SUPERCONDUCTOR TECHNOLOGIES INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Six Months EndedJune 27, 2009
    
    
    June 28, 2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (7,650,000
    )
    
    $
    (5,656,000
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    784,000
    
    
    
    871,000Stock-based compensation expense
    
    
    544,000
    
    
    
    302,000Provision for excess and obsolete inventories
    
    
    102,000
    
    
    
    Noncontrolling interest in joint venture
    
    
    87,000
    
    
    
    Fair value of derivatives
    
    
    780,000
    
    
    
    Changes in assets and liabilities:Accounts receivable
    
    
    (604,000
    )
    
    
    943,000Inventory
    
    
    911,000
    
    
    
    (2,800,000
    )Prepaid expenses and other current assets
    
    
    (281,000
    )
    
    
    27,000Patents, licenses and purchased technology
    
    
    (65,000
    )
    
    
    (175,000
    )Other assets
    
    
    7,000
    
    
    
    (8,000
    )Accounts payable, accrued expenses and other long-
term liabilities
    
    
    704,000
    
    
    
    (429,000
    )Net cash used in operating activities
    
    
    (4,681,000
    )
    
    
    (6,925,000
    )CASH FLOWS FROM INVESTING ACTIVITIES:Investment in joint venture
    
    
    12,000
    
    
    
    (401,000
    )Purchases of property and equipment
    
    
    (131,000
    )
    
    
    (95,000
    )Net cash used in investing activities
    
    
    (119,000
    )
    
    
    (496,000
    )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
    
    
    
    20,469,000Net cash provided by financing activities
    
    
    10,456,000
    
    
    
    16,469,000Net increase in cash and cash equivalents
    
    
    5,656,000
    
    
    
    9,048,000Cash and cash equivalents at beginning of period
    
    
    7,569,000
    
    
    
    3,939,000Cash and cash equivalents at end of period
    
    $
    13,225,000
    
    
    $
    12,987,000
  4




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##### Table of Contents



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
  6




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




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Other Investments
  Loss Contingencies
  Income Taxes
 Accounting for Income Taxes
 Accounting for Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109
 Marketing Costs
  Net Loss Per Share
  Stock-based Compensation
  8




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##### Table of Contents



Three months ended
    
    
    Six months endedJune 27, 2009
    
    
    June 28, 2008
    
    
    June 27, 2009
    
    
    June 28, 2008Cost of revenue
    
    $
    8,000
    
    
    $
    7,000
    
    
    $
    15,000
    
    
    $
    12,000Research and development
    
    
    68,000
    
    
    
    40,000
    
    
    
    133,000
    
    
    
    62,000Selling, general and administrative
    
    
    208,000
    
    
    
    137,000
    
    
    
    396,000
    
    
    
    228,000Total stock-based compensation expense
    
    $
    284,000
    
    
    $
    184,000
    
    
    $
    544,000
    
    
    $
    302,000
 Use of Estimates
  Fair Value of Financial Instruments
  See Note 4 Warrants
 Comprehensive Income (Loss)
  Segment Information
  9




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Certain Risks and Uncertainties
     Recent Accounting Pronouncements
  Accounting for Transfers of Financial Assetsan
amendment of FASB Statement No. 140
 Amendments to FASB Interpretation No. 46(R) Consolidation of Variable Interest Entities
 The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principlesa replacement of FASB Statement No.
162
 10




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##### Table of Contents



3. Short Term Borrowings
   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
    
    
    
    543,000
    
    
    
    
    
    
    
    544,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,650,000
    )
    
    
    (7,650,000
    )Balance at June 27, 2009
    
    
    611,523
    
    
    $
    1,000
    
    
    
    22,512,033
    
    
    $
    23,000
    
    
    $
    241,214,000
    
    
    $
    (220,336,000
    )
    
    $
    20,902,000
 Common Stock
  Equity Awards
   11




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##### Table of Contents



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
    
    
    (76,556
    )
    
    $
    6.90 - $186.50
    
    
    $
    42.61Balance at June 27, 2009
    
    
    1,157,469
    
    
    $
    1.43 - $493.75
    
    
    $
    20.83
    
    
    
    880,592
    
    
    $
    25.92
     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. Determining Whether an Instrument (or Embedded Feature) is Indexed to
an Entities Own Stock
 5. Earnings Per Share
  12




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##### Table of Contents



June 27, 2009
    
    June 28, 2008Outstanding stock options
    
    
    1,157,469
    
    
    
    1,281,272Unvested restricted stock awards
    
    
    910,998
    
    
    
    318,000Outstanding warrants
    
    
    618,237
    
    
    
    352,466Total
    
    
    2,686,704
    
    
    
    1,951,738
 6. Commitments and Contingencies
 Operating Leases
   Patents and Licenses
   Year ending December 31,
    
    Licenses
    
    
    Operating LeasesRemainder of 2009
    
    $
    150,000
    
    
    $
    654,0002010
    
    
    150,000
    
    
    
    1,333,0002011
    
    
    150,000
    
    
    
    1,364,0002012
    
    
    150,000
    
    
    
    1,396,0002013
    
    
    150,000
    
    
    
    1,429,000Thereafter
    
    
    900,000
    
    
    
    4,413,000Total payments
    
    $
    1,650,000
    
    
    $
    10,589,000
 7. Contractual Guarantees and Indemnities
  Warranties
  13




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##### Table of Contents



Intellectual Property Indemnities
  Director and Officer Indemnities and Contractual Guarantees
   General Contractual Indemnities/Products Liability
  Short Term Borrowings
 See Note 3Short Term
Borrowings.
 Contractual Contingency
  14




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##### Table of Contents



8. Details of Certain Financial Statement Components and Supplemental Disclosures of Cash Flow
Information and Non-Cash Activities
 Balance Sheet Data
 June 27,
    
    
    December 31,2009
    
    
    2008Accounts receivable:Accounts receivable-trade
    
    $
    493,000
    
    
    $
    110,000United States government accounts receivable-billed
    
    
    541,000
    
    
    
    320,000Less: allowance for doubtful accounts
    
    
    (75,000
    )
    
    
    (75,000
    )$
    959,000
    
    
    $
    355,000
 June 27,
    
    
    December 31,2009
    
    
    2008Inventories:Raw materials
    
    $
    2,425,000
    
    
    $
    2,753,000Work-in-process
    
    
    979,000
    
    
    
    1,038,000Finished goods
    
    
    1,878,000
    
    
    
    2,348,000Less inventory reserve
    
    
    (1,017,000
    )
    
    
    (861,000
    )$
    4,265,000
    
    
    $
    5,278,000
 June 27,
    
    
    December 31,2009
    
    
    2008Property and Equipment:Equipment
    
    $
    15,655,000
    
    
    $
    15,537,000Leasehold improvements
    
    
    6,755,000
    
    
    
    6,741,000Furniture and fixtures
    
    
    404,000
    
    
    
    404,00022,814,000
    
    
    
    22,682,000Less: accumulated depreciation and amortization
    
    
    (20,560,000
    )
    
    
    (19,943,000
    )$
    2,254,000
    
    
    $
    2,739,000
  June 27,
    
    
    December 31,2009
    
    
    2008Patents and Licenses:Patents pending
    
    $
    1,017,000
    
    
    $
    940,000Patents issued
    
    
    1,086,000
    
    
    
    1,059,000Less accumulated amortization
    
    
    (442,000
    )
    
    
    (409,000
    )Net patents issued
    
    
    644,000
    
    
    
    650,000Licenses pending
    
    
    
    
    
    
    39,000Licenses issued
    
    
    563,000
    
    
    
    563,000Less accumulated amortization
    
    
    (184,000
    )
    
    
    (167,000
    )Net licenses
    
    
    379,000
    
    
    
    396,000Purchased technology
    
    
    1,706,000
    
    
    
    1,706,000Less accumulated amortization
    
    
    (1,597,000
    )
    
    
    (1,479,000
    )Net purchased technology
    
    
    109,000
    
    
    
    227,000$
    2,149,000
    
    
    $
    2,252,000
 15




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##### Table of Contents



June 27,
    
    
    December 31,2009
    
    
    2008Accrued Expenses and Other Long Term
Liabilities:Salaries payable
    
    $
    292,000
    
    
    $
    12,000Compensated absences
    
    
    411,000
    
    
    
    375,000Compensation related
    
    
    50,000
    
    
    
    12,000Warranty reserve
    
    
    264,000
    
    
    
    261,000Deferred rent
    
    
    349,000
    
    
    
    325,000Fair value of warrant derivative
    
    
    780,000
    
    
    
    Other
    
    
    182,000
    
    
    
    114,0002,328,000
    
    
    
    1,099,000Less current portion
    
    
    (1,843,000
    )
    
    
    (658,000
    )Long term portion
    
    $
    485,000
    
    
    $
    441,000
 For the six months ended,June 27,
    
    
    June 28,2009
    
    
    2008Warranty Reserve Activity:Beginning balance
    
    $
    262,000
    
    
    $
    380,000Additions
    
    
    7,000
    
    
    
    21,000Deductions
    
    
    (5,000
    )
    
    
    (87,000
    )Ending balance
    
    $
    264,000
    
    
    $
    314,000
 9. Subsequent Events
  
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 General
  Our Proprietary Technology
  
    
    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.
 
    
    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.
 16




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##### Table of Contents




    
    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.
 
    
    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
 e
 
    
    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.
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Risk Factors
 Joint Ventures
 Risk Factors
 Licenses
  Recent Developments
 Proposal Submissions
  Sale of Common Stock
  Nasdaq Staff Determination Letter
  Backlog
  18




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Results of Operations
 Quarter and six months ended June 27, 2009 as compared to the quarter and six months ended June 28,
2008
       Three Months Ended
    
    
    Six Months EndedDollars in thousands
    
    June 27, 2009
    
    
    June 28, 2008
    
    
    June 27, 2009
    
    
    June 28, 2008Net commercial product sales
    
    $
    1,777
    
    
    
    100
    %
    
    $
    1,348
    
    
    
    100
    %
    
    $
    2,908
    
    
    
    100
    %
    
    $
    3,341
    
    
    
    100
    %Cost of commercial product sales
    
    
    2,441
    
    
    
    137
    %
    
    
    2,155
    
    
    
    160
    %
    
    
    4,239
    
    
    
    146
    %
    
    
    4,173
    
    
    
    125
    %Gross profit
    
    $
    (664
    )
    
    
    (37
    )%
    
    $
    (807
    )
    
    
    (60
    )%
    
    $
    (1,331
    )
    
    
    (46
    )%
    
    $
    (832
    )
    
    
    (25
    )%
  19




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Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entities Own Stock
     Liquidity and Capital Resources
 Cash Flow Analysis
     20




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Financing Activities
    Contractual Obligations and Commercial Commitments
  Capital Expenditures
  Future Liquidity
    Net Operating Loss Carryforward
    21




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Critical Accounting Policies and Estimates
   Recent Accounting Pronouncements
  Accounting for Transfers of Financial Assetsan
amendment of FASB Statement No. 140
 Amendments to FASB Interpretation No. 46(R) Consolidation of Variable Interest Entities
 The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principlesa replacement of FASB Statement No.
162
 22




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##### Table of Contents



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.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  (1)
    
    The following two Class 1 directors were elected to serve until our 2012 Annual
Meeting of Stockholders or until their successors are duly elected and qualified.
 23




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##### Table of Contents



% OF
    
    NUMBER OFNUMBER OF
    
    SHARES
    
    SHARES
    
    % OF SHARESSHARES FOR
    
    VOTING
    
    WITHHELD
    
    VOTINGLynn J. Davis
    
    
    15,315,559
    
    
    
    97.9
    
    
    
    332,998
    
    
    
    2.1Dennis J. Horowitz
    
    
    15,314,828
    
    
    
    97.9
    
    
    
    333,729
    
    
    
    2.1
  a.
    
    Jeffrey A. Quiram and Martin A. Kaplan (our Class 1 directors)
 b.
    
    John D. Lockton and David W. Vellequette (our Class 3 directors)
 (2)
    
    The appointment of Stonefield Josephson, Inc as our independent registered
public accounting firm for the year ending December 31, 2009 was ratified.
 NUMBER OF SHARES FOR
    
    % OF SHARES VOTINGVotes For
    
    
    15,358,673
    
    
    
    99.0Votes Against
    
    
    155,745
    
    
    
    1.0Votes Abstaining
    
    
    134,139
    
    
    
    
 
 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. 24




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SIGNATURES
  SUPERCONDUCTOR TECHNOLOGIES INC.Dated:  August 11, 2009
    /s/ William J. BuchananWilliam J. BuchananController/s/ Jeffrey A. QuiramJeffrey A. QuiramPresident and Chief Executive Officer 25