##### 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 April 2, 2011
 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
 Yes o or No þ




---



##### 



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
    
    
    15ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21ITEM 4. Controls and Procedures
    
    
    21PART II  OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    21ITEM 1A. Risk Factors
    
    
    21ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21ITEM 3. Defaults Upon Senior Securities
    
    
    21ITEM 4. Removed and Reserved
    
    
    21ITEM 5. Other Information
    
    
    22ITEM 6. Exhibits
    
    
    22SIGNATURES
    
    
    23Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 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;
 
    
    the current worldwide recession;
 
    
    our need to raise additional capital for our business;
 
    
    limited number of potential customers;
 
    
    rapidly advancing technology in our target markets;
 
    
    our need to overcome additional technical challenges necessary to develop and
commercialize HTS wire;
 
    
    the impact of competitive products, technologies and pricing;
 
    
    limited number of suppliers for some of our components;
 
    
    no significant backlog from quarter to quarter;
 
    
    fluctuations in sales and product demand from quarter to quarter can be
significant;
 
    
    our proprietary rights, while important to our business, are difficult and costly
to protect;
 
    
    manufacturing capacity constraints and difficulties; and
 
    
    cost and uncertainty from compliance with environmental regulations.
 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 2010.
 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 EndedApril 2, 2011
    
    
    April 3, 2010Net revenues:Commercial product revenues
    
    $
    1,603,000
    
    
    $
    2,334,000Government and other contract revenues
    
    
    17,000
    
    
    
    1,081,000Total net revenues
    
    
    1,620,000
    
    
    
    3,415,000Costs and expenses:Cost of commercial product revenues
    
    
    1,669,000
    
    
    
    2,386,000Cost of government and other contract revenue
    
    
    15,000
    
    
    
    774,000Research and development
    
    
    1,988,000
    
    
    
    1,010,000Selling, general and administrative
    
    
    1,656,000
    
    
    
    1,783,000Total costs and expenses
    
    
    5,328,000
    
    
    
    5,953,000Loss from operations
    
    
    (3,708,000
    )
    
    
    (2,538,000
    )Other Income and ExpenseAdjustments to fair value of derivatives
    
    
    
    
    
    
    42,000Interest income
    
    
    2,000
    
    
    
    1,000Interest expense
    
    
    (7,000
    )
    
    
    (7,000
    )Net loss
    
    $
    (3,713,000
    )
    
    $
    (2,502,000
    )Basic and diluted loss per common share
    
    $
    (0.12
    )
    
    $
    (0.11
    )Weighted average number of common
shares outstanding
    
    
    30,219,318
    
    
    
    21,808,816
   2




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##### Table of Contents



SUPERCONDUCTOR TECHNOLOGIES INC.


CONDENSED CONSOLIDATED BALANCE SHEETS
 April 2,
    
    
    December 31,2011
    
    
    2010(Unaudited)
    
    
    (See Note)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    16,112,000
    
    
    $
    6,069,000Accounts receivable, net
    
    
    579,000
    
    
    
    108,000Inventory, net
    
    
    1,954,000
    
    
    
    2,230,000Prepaid expenses and other current assets
    
    
    224,000
    
    
    
    344,000Total Current Assets
    
    
    18,869,000
    
    
    
    8,751,000Property and equipment, net of accumulated depreciation of
$22,129,000 and $21,948,000, respectively
    
    
    1,719,000
    
    
    
    1,334,000Patents, licenses and purchased technology, net of accumulated amortization
of $2,277,000 and $2,494,000, respectively
    
    
    1,517,000
    
    
    
    2,274,000Other assets
    
    
    208,000
    
    
    
    210,000Total Assets
    
    $
    22,313,000
    
    
    $
    12,569,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    1,162,000
    
    
    $
    548,000Accrued expenses
    
    
    825,000
    
    
    
    517,000Other current liabilities
    
    
    23,000
    
    
    
    31,000Total Current Liabilities
    
    
    2,010,000
    
    
    
    1,096,000Other long term liabilities
    
    
    601,000
    
    
    
    577,000Total Liabilities
    
    
    2,611,000
    
    
    
    1,673,000Commitments 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,
33,023,687 and 27,217,408 shares issued and outstanding, respectively
    
    
    33,000
    
    
    
    28,000Capital in excess of par value
    
    
    261,014,000
    
    
    
    248,500,000Accumulated deficit
    
    
    (241,346,000
    )
    
    
    (237,633,000
    )Total Stockholders Equity
    
    
    19,702,000
    
    
    
    10,896,000Total Liabilities and Stockholders Equity
    
    $
    22,313,000
    
    
    $
    12,569,000
    3




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##### Table of Contents



SUPERCONDUCTOR TECHNOLOGIES INC.  
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months EndedApril 2, 2011
    
    
    April 3, 2010CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (3,713,000
    )
    
    $
    (2,502,000
    )Adjustments to reconcile net loss to net cash used for
operating activities:Depreciation and amortization
    
    
    211,000
    
    
    
    258,000Stock-based compensation expense
    
    
    395,000
    
    
    
    234,000Write-off of intangibles
    
    
    770,000
    
    
    
    Provision for excess and obsolete inventories
    
    
    
    
    
    
    90,000Fair value of derivatives
    
    
    
    
    
    
    (42,000
    )Changes in assets and liabilities:Accounts receivable
    
    
    (471,000
    )
    
    
    (280,000
    )Inventories
    
    
    277,000
    
    
    
    289,000Prepaid expenses and other current assets
    
    
    120,000
    
    
    
    185,000Patents and licenses
    
    
    (42,000
    )
    
    
    (66,000
    )Other assets
    
    
    2,000
    
    
    
    9,000Accounts payable, accrued expenses and other current liabilities
    
    
    405,000
    
    
    
    648,000Net cash used in operating activities
    
    
    (2,046,000
    )
    
    
    (1,177,000
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (35,000
    )
    
    
    (80,000
    )Net cash used in investing activities
    
    
    (35,000
    )
    
    
    (80,000
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repurchase of common shares for withholding obligations
    
    
    (278,000
    )
    
    
    (573,000
    )Net proceeds from the sale of common stock
    
    
    12,402,000
    
    
    
    Net cash provided by (used in) financing activities
    
    
    12,124,000
    
    
    
    (573,000
    )Net increase (decrease) in cash and cash equivalents
    
    
    10,043,000
    
    
    
    (1,830,000
    )Cash and cash equivalents at beginning of period
    
    
    6,069,000
    
    
    
    10,365,000Cash and cash equivalents at end of period
    
    $
    16,112,000
    
    
    $
    8,535,000
   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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##### Table of Contents



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




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##### Table of Contents



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
  ,
 Marketing Costs
  Net Loss Per Share
  Stock-based Compensation
  Three months endedApril 2, 2011Expected life in years
    
    
    4.0Risk free interest rate
    
    
    1.52
    %Expected volatility
    
    
    111
    %Dividend yield
    
    
    0
    %
  8




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##### Table of Contents



Three months endedApril 2, 2011
    
    
    April 3, 2010Cost of Revenue
    
    $
    4,000
    
    
    $
    5,000Research and development
    
    
    114,000
    
    
    
    56,000Selling, general and administrative
    
    
    277,000
    
    
    
    173,000Total stock-based compensation expense
    
    $
    395,000
    
    
    $
    234,000
 Use of Estimates
  Fair Value of Financial Instruments
  Comprehensive Income
  Segment Information
  Certain Risks and Uncertainties
    9




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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, 2010
    
    
    611,523
    
    
    $
    1,000
    
    
    
    27,217,408
    
    
    $
    28,000
    
    
    $
    248,500,000
    
    
    $
    (237,633,000
    )
    
    $
    10,896,000Issuance of common stock, net
    
    
    
    
    
    
    
    
    
    
    5,443,000
    
    
    
    5,000
    
    
    
    12,397,000
    
    
    
    
    
    
    
    12,402,000Repurchase of common stock to
satisfy tax withholding obligations
    
    
    
    
    
    
    
    
    
    
    (170,653
    )
    
    
    
    
    
    
    (278,000
    )
    
    
    
    
    
    
    (278,000
    )Issuance of awards and stock based
compensation
    
    
    
    
    
    
    
    
    
    
    533,932
    
    
    
    
    
    
    
    395,000
    
    
    
    
    
    
    
    395,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,713,000
    )
    
    
    (3,713,000
    )Balance at April 2, 2011
    
    
    611,523
    
    
    $
    1,000
    
    
    
    33,023,687
    
    
    $
    33,000
    
    
    $
    261,014,000
    
    
    $
    (241,346,000
    )
    
    $
    19,702,000
 Equity Offering
  Stock Options
   10




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Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    Number of
    
    
    AverageNumber of
    
    
    
    
    
    
    Exercise
    
    
    Options
    
    
    ExerciseShares
    
    
    Price Per Share
    
    
    Price
    
    
    Exercisable
    
    
    PriceBalance at December
31, 2010
    
    
    1,083,366
    
    
    $
    1.43   $79.38
    
    
    $
    6.43
    
    
    
    830,552
    
    
    $
    7.57Granted
    
    
    618,932
    
    
    
    1.58  2.86
    
    
    
    1.81Exercised
    
    
    Canceled
    
    
    (2,270
    )
    
    
    51.56  79.38
    
    
    
    67.12Balance at April 2, 2011
    
    
    1,700,028
    
    
    $
    1.43  $74.50
    
    
    $
    4.67
    
    
    
    842,625
    
    
    $
    7.36
  Restricted Stock Awards
  WeightedNumber of
    
    
    Average GrantShares
    
    
    Date Fair ValueBalance nonvested at December 31, 2010
    
    
    720,723
    
    
    $
    1.84Granted
    
    
    533,932
    
    
    
    1.58Vested
    
    
    (390,612
    )
    
    
    1.05Forfeited
    
    
    
    
    
    
    Balance nonvested at April 2, 2011
    
    
    864,043
    
    
    $
    2.04
   Warrants
  Common SharesCurrently
    
    
    Price perTotal
    
    
    Exercisable
    
    
    Share
    
    
    Expiration DateWarrants related to April 2004 financing
    
    
    10,000
    
    
    
    10,000
    
    
    $
    18.50
    
    
    April 28, 2011
    *
 
 *
    
    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.  11




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##### Table of Contents



5. Earnings Per Share
   April 2, 2011
    
    
    April 3, 2010Outstanding stock options
    
    
    1,700,028
    
    
    
    980,295Unvested restricted stock awards
    
    
    864,043
    
    
    
    567,999Outstanding warrants
    
    
    10,000
    
    
    
    618,237Total
    
    
    2,574,071
    
    
    
    2,166,531
 6. Commitments and Contingencies
 Operating Leases
   Patents and Licenses
   Years ending December 31,
    
    Licenses
    
    
    Operating LeasesRemainder of 2011
    
    $
    25,000
    
    
    $
    979,0002012
    
    
    25,000
    
    
    
    1,336,0002013
    
    
    25,000
    
    
    
    1,368,0002014
    
    
    30,000
    
    
    
    1,408,0002015
    
    
    45,000
    
    
    
    1,448,000Thereafter
    
    
    135,000
    
    
    
    1,364,000Total payments
    
    $
    285,000
    
    
    $
    7,903,000
  7. Contractual Guarantees and Indemnities
   12




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##### Table of Contents



Warranties
  Intellectual Property Indemnities
  Director and Officer Indemnities and Contractual Guarantees
   General Contractual Indemnities/Products Liability
  8. Details of Certain Financial Statement Components and Supplemental Disclosures of Cash Flow
Information and Non-Cash Activities
 Balance Sheet Data
 April 2, 2011
    
    
    December 31, 2010Accounts receivable:Accounts receivable-trade
    
    $
    576,000
    
    
    $
    36,000U.S. government accounts receivable-billed
    
    
    5,000
    
    
    
    74,000Less: allowance for doubtful accounts
    
    
    (2,000
    )
    
    
    (2,000
    )$
    579,000
    
    
    $
    108,000
 April 2, 2011
    
    
    December 31, 2010Inventories:Raw materials
    
    $
    1,408,000
    
    
    $
    1,499,000Work-in-process
    
    
    569,000
    
    
    
    511,000Finished goods
    
    
    1,070,000
    
    
    
    1,316,000Less inventory reserve
    
    
    (1,093,000
    )
    
    
    (1,096,000
    )$
    1,954,000
    
    
    $
    2,230,000
  13




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##### Table of Contents



April 2, 2011
    
    
    December 31, 2010Property and Equipment:Equipment
    
    $
    16,642,000
    
    
    $
    16,092,000Leasehold improvements
    
    
    6,802,000
    
    
    
    6,786,000Furniture and fixtures
    
    
    404,000
    
    
    
    404,00023,848,000
    
    
    
    23,282,000Less: accumulated depreciation and amortization
    
    
    (22,129,000
    )
    
    
    (21,948,000
    )$
    1,719,000
    
    
    $
    1,334,000
  April 2, 2011
    
    
    December 31, 2010Patents and Licenses:Patents pending
    
    $
    633,000
    
    
    $
    1,110,000Patents issued
    
    
    1,455,000
    
    
    
    1,382,000Less accumulated amortization
    
    
    (571,000
    )
    
    
    (554,000
    )Net patents issued
    
    
    884,000
    
    
    
    828,000Licenses Pending
    
    
    
    
    
    
    7,000Licenses Issued
    
    
    
    
    
    
    563,000Less accumulated amortization
    
    
    
    
    
    
    (234,000
    )Net licenses
    
    
    
    
    
    
    329,000Purchased technology
    
    
    1,706,000
    
    
    
    1,706,000Less accumulated amortization
    
    
    (1,706,000
    )
    
    
    (1,706,000
    )Net purchased technology
    
    
    
    
    
    
    $
    1,517,000
    
    
    $
    2,274,000
  April 2, 2011
    
    
    December 31, 2010Accrued Expenses and Other Long Term
Liabilities:Salaries Payable
    
    $
    214,000
    
    
    $
    116,000Compensated Absences
    
    
    314,000
    
    
    
    246,000Compensation related
    
    
    92,000
    
    
    
    27,000Warranty reserve
    
    
    299,000
    
    
    
    289,000Deferred rent
    
    
    399,000
    
    
    
    391,000Other
    
    
    131,000
    
    
    
    56,0001,449,000
    
    
    
    1,125,000Less current portion
    
    
    (848,000
    )
    
    
    (548,000
    )Long term portion
    
    $
    601,000
    
    
    $
    577,000
 For the three months ended,April 2, 2011
    
    
    April 3, 2010Warranty Reserve Activity:Beginning balance
    
    $
    289,000
    
    
    $
    255,000Additions
    
    
    13,000
    
    
    
    42,000Deductions
    
    
    (3,000
    )
    
    
    (6,000
    )Ending balance
    
    $
    299,000
    
    
    $
    291,000 9.
Subsequent Events
 Subsequent Events
  14




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 General
  Strategic Initiatives
  
    
    Wire Platform. Following a review of our technical capabilities and core
competencies, we determined that extending our HTS materials production into a new
wire platform for power applications offers an attractive strategic business
opportunity. Our second generation (2G) HTS wire product development is focused on
large markets where the advantages of HTS wire are recognized by the industry. Our
initial product roadmap targets three important applications:
 
    
    Superconducting High Power Transmission Cables: HTS advanced
power transmission cable transmits five to twenty times the electrical power
of traditional copper or aluminum cables with much improved efficiency.
 
    
    Superconducting Fault Current Limiters (SFCL): SFCLs act like
powerful surge protectors, preventing harmful faults from taking down costly
substation equipment. SFCLs enable the energy efficient connections of
distributed power sources to the grid, fast reliable grid protection, and
utilize smart grid design criteria.
 
    
    Superconducting Wind Turbine Generators: Superconducting wind
turbines allow utilities to add more power per tower by significantly
reducing turbine size and weight and improving power generation efficiency.
 While substantial technical challenges and business challenges remain before we have a
commercially successful product introduction, we recently announced that we successfully
produced 2G HTS wire samples that meet requirements specified by customers for HTS AC power
cable, SFCLs and HTS wind turbine applications. We also announced high-magnetic-field test
results for our 2G HTS wire. In an ongoing collaborative research and development
agreement with Los Alamos National Laboratory (LANL), we and LANL produced a 2G HTS wire
sample that demonstrates exceptional in-field critical current values. This
current-carrying capability in high magnetic field demonstrates the effectiveness of our
HTS fabrication process at producing 2G HTS wire for demanding applications such as
superconducting fault current limiters and high-power wind turbine generators.
 
    
    RF Filters. Conventional RF filters are fabricated primarily from aluminum blocks
with hollow cavities, resonators, and tuning elements incorporated to make a frequency
specific filter. Our filter structures resemble a circuit on a semiconductor using a
circuit that is etched into HTS materials that are deposited on a wafer. Our unique
and innovative circuits allow us to utilize the characteristics of the HTS materials
for this application. We have also developed unique tuning methods that allow us to
produce a frequency specific filter.
 
    
    Cryocoolers. HTS circuits need to be cooled to the critical temperature
that enables the superconducting properties of the materials to be utilized. To meet
this need, we developed a unique cryocooler that can efficiently and reliably cool the
circuit to the critical temperature (77 degrees Kelvin). As a result, our wireless
products are maintenance free and reliable enough to be deployed for many years.
  15




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##### Table of Contents



Our HTS Manufacturing System
  Our Proprietary Technology
    Our Wireless Business
  
    
    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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Other Investments
 .
 Licenses
  Government Contracts
  
    
    terminate existing contracts for convenience, which affords the U.S. government the
right to terminate the contract in whole or in part any time it wants for any
reason or no reason, as well as for default;
 
    
    reduce or modify contracts or subcontracts, if its requirements or budgetary
constraints change;
 
    
    cancel or reduce multi-year contracts and related orders, if funds for contract
performance for any subsequent year become unavailable;
 
    
    adjust reimbursable contract costs and fees on the basis of audits completed by its
agencies through exercise of its oversight rights; and
 
    
    control or prohibit the export of products.
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Results of Operations
 Quarter Ended April 2, 2011 compared to the Quarter Ended April 3, 2010
       For the quarters endedApril 2, 2011
    
    
    April 3, 2010(Dollars in thousands)Net commercial product sales
    
    $
    1,603
    
    
    
    100.0
    %
    
    $
    2,334
    
    
    
    100.0
    %Total cost of commercial
product sales
    
    
    1,669
    
    
    
    104.1
    %
    
    
    2,386
    
    
    
    102.2
    %Gross loss
    
    $
    (66
    )
    
    
    (4.1
    %)
    
    $
    (52
    )
    
    
    (2.2
    %)
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Liquidity and Capital Resources
 Cash Flow Analysis
      Financing Activities
     19




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Contractual Obligations and Commercial Commitments
  Capital Expenditures
  Future Liquidity
   Net Operating Loss Carryforward
  Critical Accounting Policies and Estimates
   Backlog
   20




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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 4.
    
    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.
  Total Number of Shares
    
    
    Average Price Paid PerPeriod
    
    Purchased
    
    
    ShareJanuary 129, 2011
    
    
    166,988
    (1)
    
    $
    1.60January 30February 26, 2011
    
    
    3,665
    (1)
    
    $
    2.82February 27April 2, 2011
    
    
    
    
    
    $
    Total
    
    
    170,653
    
    
    $
    1.63
 
 (1)
    
    Shares surrendered to us by employees to satisfy tax withholding obligations that arose upon
the vesting of restricted stock awards. These repurchases were not made pursuant to publicly
announced plans or programs. 
 Item 3.
    
    Defaults Upon Senior Securities.
  
 Item 4.
    
    Removed and Reserved.
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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.  22




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SIGNATURES
  SUPERCONDUCTOR TECHNOLOGIES INC.Dated:  May 9, 2011
    /s/ William J. BuchananWilliam J. BuchananChief Financial Officer/s/ Jeffrey A. QuiramJeffrey A. QuiramPresident and Chief Executive Officer  23